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
• B. ₹ 700
• C. ₹ 800
• D. ₹ 900

Answer 1

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
$A=P(1+\frac{R}{100}{)}^n\text{and}C.I=A-P$

$C.I=P{\left[\right(1+\frac{r}{100})}^n]-P$

$₹960=P[{(1+\frac{40}{100})}^2-1]$

$₹960=P[\frac{{140}^2}{{100}^2}-1]$

$P=\left[\frac{960\times {100}^2}{{140}^2-{100}^2}\right]$

$P=₹\frac{960\times 100}{96}=₹1000$

So, the amount invested is ₹ 1000.

$\text{Simple interest on this sum}=\frac{PRT}{100}=\frac{1000\times 40\times 2}{100}=₹800$