Question

A certain sum of money ,invested for 4 years at 8 % p.a. simple interest ,earns an interest of ₹ 10,000. Find

(a) the sum of money

(b) the compound interest earned by this money in two years at 12 % p.a. compound interest

• A. ₹ 31,250 , ₹ 7950
• B. ₹ 31,250 , ₹ 39200
• C. ₹ 30,000 , ₹ 8000
• D. ₹ 29,250 , ₹ 6950

Answer 1

The correct option is A

₹ 31,250 , ₹ 7950

Let the principal be P r $=8\%$ p.a. I = ₹ 10,000 T = 4 years
$\Rightarrow$ Interest = $\frac{P\times T\times 8\times }{100}$
$\therefore$ 10000 = $\frac{P\times 4\times 8}{100}$

$\therefore$ P = $\frac{10000\times 100}{4\times 8}$

= ₹ 31,250

Hence the sum of money = ₹ 31,250

For Compound Interest

A = P (1 + $\frac{r}{100}{)}^n$
$\Rightarrow 31,250\left(\right(1+\frac{12}{100}{)}^2$

$\Rightarrow 31,250(\frac{112}{100}{)}^2$
Amount = ₹ 39,200

Hence Compound Interest = 39,200 - 31250 = ₹ 7950