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    Question

    An initial investment made at a 25% annual interest

    rate, compounded semi-annually, grows to Rs. 10,125 after one year. How much simple interest would this sum earn if instead it was invested at a 20% annual rate as simple interest for a period of two years?
    A Rs. 3200 Correct Answer Incorrect Answer
    B Rs. 2400 Correct Answer Incorrect Answer
    C Rs. 3600 Correct Answer Incorrect Answer
    D Rs. 4000 Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    Let the principal amount is Rs. ‘P’. R = 25/2 = 12.5% So, P(1 + 12.5/100)2 = 10125 So, P = 8000 Desired interest = 0.20 × 8000 × 2 = Rs. 3200 Hence, option a.

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