Question
A sum when invested at simple interest of 10% p.a. becomes Rs. 1,680 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?
Solution
Simple interest = (Sum × Rate of interest × Time period) ÷ 100 Let the sum invested be Rs. ‘P’ So,
1680 − P = (P × 10 × 4) ÷ 100 Or,
1680 − P = 0.4P Or,
1680 = 1.4P So,
P = 1200 Amount received from second investment =
1200 × (1 + 20/100)²
= 1200 × 1.44
= Rs. 1,728
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