Question

    The interest earned on investing Rs. 4000 for 2 years at the rate of 10% p.a., compounded annually, is used to purchase an article. If the article is later sold at 20% profit, then find the selling price of the article.

    A Rs. 1000 Correct Answer Incorrect Answer
    B Rs. 1009 Correct Answer Incorrect Answer
    C Rs. 1008 Correct Answer Incorrect Answer
    D Rs. 1018 Correct Answer Incorrect Answer

    Solution

    Compound interest earned = 4000 × {1 + (10/100)}2 – 4000 = 4840 – 4000 = Rs. 840 So, selling price of the article = 840 × 1.2 = Rs. 1008

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