Krishan invested a sum of ₹25,000 in two parts. He earned 11% p.a. simple interest on part 1 and 10% p.a. compound interest compounded annually on part 2. If the total interest received by him after 2 years is ₹5,370, then find the sum invested on simple interest.

₹12,000

Let sum in simple interest = A

So, sum invested in compound interest = ( 25000 - A )

Formula used here is :-

Simple interest = \(\frac{P × R × T}{100}\)

Compound interest = P$(1 \;+\; \frac{R}{100})^t$ - P

According to question,

[ \(\frac{A × 11 × 2}{100}\)] + [ ( 25000 - A )× \(\frac{11 }{10}\) × \(\frac{11 }{10}\) - ( 25000 - A ) ] = 5370

\(\frac{22A}{100}\) + 30250 -  \(\frac{121A}{100}\)  - ( 25000 - A ) = 5370

On solving ,

A = 12000

So, Amount invested on simple interest = 12000