Question
A sum when invested at simple interest of 10% p.a.
becomes Rs. 2,100 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 after 2 years?Solution
Simple interest = (Sum × Rate of interest × Time period) ÷ 100 Let the sum invested be Rs. ‘P’ So, 2100 − P = (P × 10 × 5) ÷ 100 Or, 2100 − P = 0.5P Or, 2100 = 1.5P So, P = 1400 Amount received from second investment = P × {1 + (Rate/100)}² Required amount = 1400 × (1 + 20/100)² = 1400 × 1.44 = Rs. 2,016
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