Question
A sum of money at a specific
annual simple interest rate grows to Rs. 2900 in 3 years and Rs. 3500 in 5 years. Calculate the interest earned when this same amount is invested at a rate of 25% p.a. compounded annually for 2 years.Solution
ATQ,
Simple interest earned in two years = 3500 – 2900 = Rs. 600 Simple interest earned in 1 year = Rs. 300 So, sum invested = 2900 – 3 × 300 = 2900 – 900 = Rs. 2000 Desired interest = [(1.25)2 – 1] × 2000 = 0.5625 × 2000 = Rs.1125
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