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    Question

    An initial principal sum of Rs. 8000, invested by

    Pranav, accrued interest at a compound rate of 20% annually for a period of 2 years. Subsequently, the entire sum, compounded with the interest, was redeployed into an account offering simple interest at an annual rate of 15% for an additional 2 years. Calculate the cumulative interest earnings that Pranav accrued over the comprehensive 4-year period.
    A Rs.5976 Correct Answer Incorrect Answer
    B Rs.6000 Correct Answer Incorrect Answer
    C Rs.6900 Correct Answer Incorrect Answer
    D Rs.6976 Correct Answer Incorrect Answer
    E none of these Correct Answer Incorrect Answer

    Solution

    ATQ, Amount received after initial 2 years = 8000 × (1.2)2 = Rs. 11520 Amount received after 4 years = 11520 + (11520 × 0.15 × 2) = Rs. 14976 Required interest earned = 14976 – 8000  = Rs. 6976

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