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    Question

    A certain sum is invested at an interest rate of 24% per

    annum, compounded annually, for 2 years, and the compound interest earned after this period is Rs. 6,720. What is the initial sum that was invested?
    A Rs. 15,000 Correct Answer Incorrect Answer
    B Rs. 12,500 Correct Answer Incorrect Answer
    C Rs. 7,500 Correct Answer Incorrect Answer
    D Rs. 20,000 Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    Let the sum invested be Rs. 'P'. CI = P X (1 + rate/100)t - P Or, 6,720 = P X 1.242 - P Or, 6,720 = 1.5376P - P Or, 6,720 = 0.5376P Or, 'P' = 6720 ÷ 0.5376 So, 'P' = 12,500

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