Question
A sum of money grows to Rs. 1560 when invested at a
simple interest rate of 15% per annum for 2 years. What will be the total amount received if the same sum is invested at a compound interest rate of 20% per annum, compounded annually, for the same 2-year period?Solution
Let the sum invested at simple interest be Rs. x Therefore, (x × 15 × 2)/100 + x = 1560 Or, 30x/100 + x = 1560 Or, 130x = 1560 × 100 Or, x = Rs. 1200 Therefore, amount received on compound interest at the rate of 20% p.a. for 2 years will be A = 1200{1+ 20/100}2 = 1200 × 36/25 = Rs. 1728Â
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