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Simple Interest

Smith investe...

Question

Smith invested 5000 $f o r t w o y e a r s . F o r t h e f i r s t y e a r, t h e r a t e o f i n t e r e s t w a s$ 7\% $a n d t h e s e c o n d y e a r i t w a s$ 8.5\%$. How much interest did he earn at the end of the two year period?

804.75$

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604.54$

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304.54$

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None of these

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Solution

The correct option is A 804.75 $I n t e r e s t a t t h e e n d o f t h e f i r s t y e a r$ =7\%\times 5000$

$= \frac{7}{100} \times 5000$

$= $ 350$
Interest at the end of the second year $= 8.5 % \times (5000 + 350)$

$= \frac{8.5}{100} \times 5350$

$= $ 454.75$

Total interest at theend of the two year period $= $ 350 + $ 454.75$
$= $ 804.75$

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