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    Question

    P invested Rs. 20,000 in a SIP offering 10% compound interest compounded annually, whereas M invested Rs. 2000 more than the amount invested by P in a SIP offering 11% simple interest. The difference between the interests earned by P and M after three years is Rs. 640.

    "The values given in which of the following options make the above statement true?"

    I.  2000, 640

    II. 1500, 450

    III. 3000, 975

    IV. 500, 145

    A IV and III Correct Answer Incorrect Answer
    B I and IV Correct Answer Incorrect Answer
    C Only I Correct Answer Incorrect Answer
    D I and III Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

     ATQ, Interest earned by P after three years = 20000 × {(1 + 0.10)3 – 1} = 20000 × 0.331 = Rs. 6,620 Option I: Amount invested by M = 20000 + 2000 = Rs. 22,000 Interest earned by M after three years = 22000 × 0.11 × 3 = Rs. 7260 Difference between the interests earned by P and M = 7260 – 6620 = Rs. 640 So option I can be the answer. Option II: Amount invested by M = 20000 + 1500 = Rs. 21,500 Interest earned by M after three years = 21500 × 0.11 × 3 = Rs. 7095 Difference between the interests earned by P and M = 7095 – 6620 = Rs. 475 So option II can’t be the answer. Option III: Amount invested by M = 20000 + 3000 = Rs. 23,000 Interest earned by M after three years = 23000 × 0.11 × 3 = Rs. 7590 Difference between the interests earned by P and M = 7590 – 6620 = Rs. 970 So option III can’t be the answer. Option IV: Amount invested by M = 20000 + 500 = Rs. 20,500 Interest earned by M after three years = 20500 × 0.11 × 3 = Rs. 6765 Difference between the interests earned by P and M = 6765 – 6620 = Rs. 145 So option IV can be the answer.

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