A man invests ₹7,000 at 8% per annum simple interest for 2 years and ₹10,000 at compound interest at the same rate for the same period, compounded annually. What will be the total interest and the total amount(in ₹) respectively, on maturity?
Answer & explanation
Correct answer: option 4
In first case ,
Amount = Interest + Principal
Simple interest = \(\frac{P × R × T}{100}\)
Amount = \(\frac{7000 × 8 × 2}{100}\) + 7000
= Rs. 8120
In 2 nd case ,
With compound interest ,
Amount = P[ 1 + \(\frac{Rate}{100}\) ]²
= 10000 × [ 1 + \(\frac{ 8 }{100}\) ]²
= 10000 × \(\frac{ 27 }{25}\) × \(\frac{ 27 }{25}\)
= Rs. 11664
So, Total amount after 2 years = 11664 + 8120 = 19784
Total interest earned in 2 years = 19784 - ( 10000 + 7000 )
=Rs.2784
Ans :- 2784, 19784