Question

Mr. Shah invested $Rs.3,20,000$ in bank at $10\%$ compound interest. He also invested $Rs.2,40,000$ in mutual funds. At market rates he got $Rs.3,05,000$ after $2$ years. How much did he gain? Which of his investments was more profitable?

Answer 1

$1^{st}$ year

$P=Rs3,20,000$

$r=10\%p.a.$

$t=1yr$

$\therefore Interest=Rs\frac{3,20,000\times 10\times 1}{100}=Rs32000$

$\therefore A=Rs3,52,000$

$2^{nd}$ year

$P=Rs3,52,000$

$r=10\%.p.a.$

$t=1yr$

$\therefore I=Rs\frac{352000\times 10\times 1}{100}=Rs35,200$

$\therefore A=Rs3,,87,200$ ............. $\left(1\right)$

Mutual funds

Investment $=Rs2,40,000$

Final amount $=Rs3,05,000$ .......... $\left(2\right)$

$\therefore$ Profit $=Rs65,000$

$\therefore$ He earned $Rs65,000$ as profit in mutual funds. ........... Ans $\left(i\right)$

Now from $\left(1\right)$ and $\left(2\right)$

We find bank's investment was more profitable.