Question
Rs. 5000 when invested at simple interest of r% p.a.
amounts to Rs. 7000 in 24 months. If the same sum had been invested for 1 year at compound interest of (r + 10) % p.a. (compounded in every 4 months), then the amount received would be?Solution
According to the question, 7000 – 5000 = (5000 × r × 24) ÷ (12 × 100) Or, 2000 = 100 × r Or, r = 20 When the sum is invested at compound interest, Effective rate of interest = (r + 10) ÷ 3 = (20 + 10) ÷ 3 = 10% Effective time period = 1 × 3 = 3 units Amount received = Principal × {1 + (r/100)}time period = 5000 × {1 + (10/100)}3 = 5000 × (1.1)3 = 6655
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