Question

    A man deposited Rs.2000 at a simple interest rate of 25%

    per annum for 4 years. He then reinvested the amount he received into a compound interest scheme for 2 years at 15% per annum. Calculate the compound interest earned in the second investment.
    A Rs.1000 Correct Answer Incorrect Answer
    B Rs.990 Correct Answer Incorrect Answer
    C Rs.900 Correct Answer Incorrect Answer
    D Rs.870 Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    ATQ,

    SI = PNR / 100

    SI = 2000 × 25 × 4 / 100

    SI = 2000

    Total amount after S.I = 2000 + 2000 = Rs.4000

    CI = P(1 + R/100)ⁿ – P

    Compound Interest = 4000 × (1 + 15/100)² – 4000

    Compound Interest = 4000 × (115/100)² – 4000 = Rs.990

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