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Question

Ram invested a certain amount in the mutual fund and got ₹ 960 as the compound interest on this sum at the interest rate of 40% per annum for 2 years. Find the simple interest on the amount which Ram invested in the bank.

A
₹ 600
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B
₹ 700
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C
₹ 800
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D
₹ 900
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Solution

The correct option is C ₹ 800
Given
Compound interest = ₹ 960
Time period (n) = 2 years
Interest rate (r) = 40%

By using formula for compound interest, we can write
A=P(1+R100)n and C.I=AP

C.I=P[(1+r100)n]P

960=P[(1+40100)21]

960=P[140210021]

P=[960×100214021002]

P= 960×10096= 1000

So, the amount invested is ₹ 1000.

Simple interest on this sum =PRT100=1000×40×2100=800

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