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    Question

    Anil initiated his financial journey by investing Rs.

    7500 in a Contra fund, which offered a simple interest rate of 18% per annum for a duration of 2 years. After this period, he harnessed the compounded power of the accumulated amount by transferring it to another fund with an interest rate of 20% per annum, compounded annually, for 2 years. Determine the total interest earned by Anil at the end of four years ?
    A Rs.5188 Correct Answer Incorrect Answer
    B Rs.6188 Correct Answer Incorrect Answer
    C Rs.7120 Correct Answer Incorrect Answer
    D Rs.7188 Correct Answer Incorrect Answer
    E none of these Correct Answer Incorrect Answer

    Solution

    ATQ, Amount accumulated after 2 years = 7500 × 0.18 × 2 + 7500 = 2700 + 7500 = Rs. 10200 Amount accumulated after 4 years = 10200 × [(1.2)2 – 1] = 10200 × 0.44 = Rs. 4488 Hence Required interest = 10200 + 4488 – 7500 =  Rs.7188

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