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    Question

    A sum when invested at simple interest of 10% p.a.

    becomes Rs. 2,100 in 4 years. If the same sum was invested at compound interest of 20% p.a. for 2 years, then what would be the amount received after 2 years?
    A Rs. 1,620 Correct Answer Incorrect Answer
    B Rs. 1,728 Correct Answer Incorrect Answer
    C Rs. 1,800 Correct Answer Incorrect Answer
    D Rs. 2,160 Correct Answer Incorrect Answer
    E Rs. 2,000 Correct Answer Incorrect Answer

    Solution

    Simple interest = (Sum × Rate of interest × Time period) ÷ 100 Let the sum invested be Rs. ‘P’ So,
    2100 − P = (P × 10 × 4) ÷ 100 Or,
    2100 − P = 0.4P Or,
    2100 = 1.4P So,
    P = 1500 Amount received from second investment =
    P × {1 + (Rate/100)}² Required amount =
    1500 × (1 + 20/100)²
    = 1500 × 1.44
    = Rs. 2,160

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