Question
A person invests ₹40,000 at a simple interest rate of
5% per annum for 2 years and reinvests the total amount, including interest, in a scheme offering compound interest of 10% per annum compounded yearly for 2 years. Find the total amount after 4 years.Solution
Simple interest for 2 years = (40,000 × 5 × 2)/100 = ₹4,000. Total amount after 2 years = ₹40,000 + ₹4,000 = ₹44,000. Compound interest for 2 years = 44,000 × (1 + 10/100)² = 44,000 × 1.21 = ₹53,240. Correct option: e
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