Question
A sum when invested at simple interest of 12% p.a. becomes Rs. 2,080 in 5 years.
If the same sum was invested at compound interest of 20% p.a. for 2 years, then what would be the amount received?
Solution
Simple interest = (Sum × Rate of interest × Time period) ÷ 100 Let the sum invested be Rs. ‘P’ So,
2080 − P = (P × 12 × 5) ÷ 100 Or,
2080 − P = 0.6P Or,
2080 = 1.6P So,
P = 1300 Amount received from second investment =
1300 × (1 + 20/100)²
= 1300 × 1.44
= Rs. 1,872
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