A person invests ₹50,000 at 10% p.a. compounded annually for 3 years. He then reinvests the amount for 2 more years at 12% p.a. compounded annually. What is the total compound interest earned at the end of 5 years?
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Correct answer: B
Explanation
Initial amount = ₹50,000
Amount after 3 years at 10% compound interest = 50,000 × (1.10)³
= 50,000 × 1.331= ₹66,550
This amount was invested for 2 years at 12%.
Final amount = 66,550 × (1.12)²
= 66,550 × 1.2544= ₹83,485.52
Total compound interest = 83,485.52 − 50,000 = ₹33,485.52