Question
Rs. 6,500 is invested in scheme ‘A’ for a year at
simple interest of 20% p.a. The interest received from scheme ‘A’ is reinvested for 2 years in scheme ‘B’ which offers compound interest (compounded annually) of 20% p.a. What is the total amount received from scheme ‘B’?Solution
Interest received from scheme ‘A’ = 6500 × (20/100) = Rs. 1300 Amount received from scheme ‘B’ = 1300 × {1 + (20/100)2} = 1.44 × 1300 = Rs. 1872
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