Question 71

A sum of money is invested at a compound interest rate of 20% per annum, compounded annually. After 3 years, the amount becomes Rs. 8,640. If the same amount had been invested at a rate of 40% per annum for the same duration, what would the amount have been after 2 years?

Solution

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Let the principal be Rs. X.

We have: $$8640=X\left(1.2\right)^3$$

Or, $$8640=1.728X$$

We get X = Rs. 5000

If Rs. 5000 is invested for 2 years at the rate of 40%,

Amount = $$5,000\times\ \left(1.4\right)^2$$

Rs. 9800

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