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    Question

    Rs. 2500 is invested in scheme ‘A’ for a year at

    simple interest of 25% p.a. The interest received from scheme ‘A’ is reinvested for 2 years in scheme ‘B’ which offers compound interest (compounded annually) of 20% p.a. What is the total amount received from scheme ‘B’?
    A Rs. 910 Correct Answer Incorrect Answer
    B Rs. 920 Correct Answer Incorrect Answer
    C Rs. 900 Correct Answer Incorrect Answer
    D Rs. 930 Correct Answer Incorrect Answer

    Solution

    Calculate the simple interest from scheme A Principal (P) = ₹2500 Rate of interest (R) = 25% per annum Time (T) = 1 year The formula for simple interest is: Substitute the values: The interest received from scheme A is ₹625.

    Reinvest the interest in scheme B at compound interest Principal for scheme B = ₹625 (interest received from scheme A) Rate of interest (R) = 20% per annum Time (T) = 2 years The formula for compound interest (compounded annually) is: Substitute the values:

    The total amount received from scheme B is ₹900.

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