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    Question

    A man deposited Rs.2000 at a simple interest rate of 25%

    per annum for 4 years. He then reinvested the amount he received into a compound interest scheme for 2 years at 15% per annum. Calculate the compound interest earned in the second investment.
    A Rs.1000 Correct Answer Incorrect Answer
    B Rs.1290 Correct Answer Incorrect Answer
    C Rs.900 Correct Answer Incorrect Answer
    D Rs.870 Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    ATQ,

    Simple Interest Principal = 2000   Rate = 25%   Time = 4 years SI = (2000 × 25 × 4) / 100 = 2000   Amount after 4 years = 2000 + 2000 = 4000 Compound Interest Principal = 4000   Rate = 15%   Time = 2 years Amount = 4000 × (1 + 15/100)²  = 4000 × (1.15)²  = 4000 × 1.3225 = 5290 Compound Interest = 5290 - 4000 = 1290

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