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?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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