Question
A man loans out Rs. 22,100 at a simple interest rate of
20% per annum. After 2 years, he reinvests the total amount received at an annual compound interest rate of 15%. What will be the compound interest earned on this reinvested amount after 2 years?Solution
Total amount after 2 years = 22100 + (22100 × 20 × 2)/100 = 22100 + 8840 = 30940 Compound interest = 30940 × ((1.15)2 – 1) = Rs. 9978.15
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