Question 14

Assume it is the beginning of the year today. Ankita will earn INR 10,000 at the end of the year, which she plans to invest in a bank deposit immediately at a fixed simple interest of 0.5% per annum. Her yearly income will increase by INR 10,000 every year, and the fixed simple interest offered by the bank on new deposits will also increase by 0.5% per annum every year. If Ankita continues to invest all her yearly income in new bank deposits at the end of each year, the total interest earned by her, in INR, in five years from today will be__________.


Correct Answer: 2500

She can invest 10,000 at 0.5% interest at the end of this year. This will be for four years. Interest = $$\frac{\left(10000\cdot0.5\cdot4\right)}{100}=200$$

Next year her income will be 20,000, and the interest will be 1%.This will be for three years. Interest = $$\frac{\left(20000\cdot1\cdot3\right)}{100} = 600$$

Next year her income will be 30,000, and the interest will be 1.5%.This will be for two years. Interest = $$\frac{\left(30000\cdot1.5\cdot2\right)}{100}=900$$

Next year her income will be 40,000, and the interest will be 2%.This will be for two years. Interest = $$\frac{\left(40000\cdot2\cdot1\right)}{100}=800$$

The sum of all these interest = 20+600+900+800 = 2500

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