A certain sum invested on compound interest (compounded anually) grows to Rs. 5040 in three years. If the rate of interest is 20% for the first year, 40% for the second and 50% for the third year, then what is the sum?
Show answer & explanation
Correct answer: D
Explanation
Correct Answer is option 4 i.e. Rs. 2000
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Understanding |
Application |
Calculation |
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Rate of interest is 20% for the first year, 40% for the second year.
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So, Cumulative rate for 2 years = 68%
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= [20 + 40 + (20 × 40)/100] = [60 + 8] = 68 |
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Rate of interest is 50% for the 3rd year. |
So, Cumulative rate for 3 years = 152% |
= [68 + 50 + (68 × 50)/100] = [118 + 34] = 152 |
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Given; Amount = Rs. 5040 Principal = P Rate = 152% Time = 1 |
So, 5040 = P + PRT/100 ⇒ P = Rs. 2000 |
5040 = P + (P × 152 × 1)/100 ⇒ P + 1.52P = 5040 ⇒ 2.52P = 5040 ⇒ P = 2000 |