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      Question

      Simica invested a certain amount of money at a simple

      interest rate of 12.5% per annum and earned Rs. 2,400 as interest over 3 years. If Tabu invested the same amount at a compound interest rate of 10% per annum, compounded annually, how much interest would she earn in 3 years?
      A Rs. 2,118.40 Correct Answer Incorrect Answer
      B Rs. 2,048.40 Correct Answer Incorrect Answer
      C Rs. 1,828.40 Correct Answer Incorrect Answer
      D Rs. 1,948.40 Correct Answer Incorrect Answer

      Solution

      Let the sum invested by Simica = Rs. 'Y'

      Interest received by Simica = (Y X 12.5 X 3) ÷ 100 = 2400

      So, Y = 2400 ÷ 0.375 = 6400

      So, sum invested by Tabu = Rs. 6400

      Interest received by Tabu = 6400 X {1 + (10/100)} 3  - 6400

      = 6400 X 1.1 3  – 6400 = 8518.40 – 6400 = Rs. 2,118.40

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