A sum of money is invested at a rate of compounded interest that is paid out yearly. In the first two years, the interest was ₹400 and ₹420 respectively. The sum is:
Answer & explanation
Correct answer: option 3
Difference in interest = 420 - 400 = Rs. 20
Rate = \(\frac{ 20 }{400}\) × 100%
= 5%
Now,
For 1st year , Interest on Sum = 400
So, 5% = 400
Sum = 100% = \(\frac{ 400 }{5}\) × 100
= Rs. 8000