Question
Sita invests a certain amount at an annual simple
interest rate of 10% for 3 years. The total amount she receives after this period is then reinvested at an annual simple interest rate of 6% for the next 4 years. Determine the ratio of the initial investment to the final amount obtained at the end of the entire period.Solution
ATQ, Let initial = P After 3 years at 10% SI: Amount = P(1 + 0.10×3) = P(1 + 0.30) = 1.30P After 4 years at 6% SI on 1.30P: Final = 1.30P(1 + 0.06×4) = 1.30P(1 + 0.24) = 1.30P × 1.24 = 1.612P Ratio (initial : final) = P : 1.612P = 1 : 1.612 = 250 : 403
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