Question

Mr. Sayyad kept Rs. 40,000 in a bank at 8% compound interest for 2 years. Mr. Fernandes invested Rs. 1,20,000 in a mutual fund for 2 years. After 2 years, Mr. Fernandes got Rs. 1,92,000. Whose investment turned out to be more profitable ?

Answer 1

Amount deposited by Mr. Sayyed = Rs 40,000
Rate of interest = 8%
Time = 2 years
CI = Amount $-$ Principle
$$\begin{gathered} =P{\left(1+\frac{R}{100}\right)}^n-P \\ =40,000{\left(1+\frac{8}{100}\right)}^2-40,000 \\ =40,000\left[{\left(\frac{108}{100}\right)}^2-1\right] \\ =40,000\left(1.1664-1\right) \\ =40,000\times 0.1664 \\ =\mathrm{Rs}6656 \end{gathered}$$
$\mathrm{Percentage}\mathrm{profit}=\frac{6656}{40,000}\times 100=16.64\%$
Investment in mutual funds by Mr. Fernandes =Rs 1,20,000
Return of investment = Rs 1,92,000
Profit = $1,92,000-1,20,000=\mathrm{Rs}72,000$
Percentage profit from mutual funds = $\frac{72,000}{1,20,000}\times 100=60\%$
Thus, investment by Mr. Fernandes turned out to be more profitable.