A certain sum invested on compound interest at 10% per annum compounded annually amounts to ₹19404 in 18 months. What was the sum invested (in ₹)?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → 16800
With interest compounded annually, a part of a year earns interest at the matching part of the yearly rate. So 18 months is one year at 10% followed by half a year at 5%, each on the amount reached so far.
Amount after 18 months \(\displaystyle =P\times\frac{110}{100}\times\frac{105}{100}=P\times\frac{231}{200}\)
\(\displaystyle P\times\frac{231}{200}=19404\)
\(\displaystyle P=\frac{19404\times200}{231}=84\times200=16800\)