A sum is invested at compound interest (compounded annually) at a certain rate. The interest earned in the 1st year is Rs. 2,000, and in the 2nd year it is Rs. 2,400. Find 50% of the sum invested.
Show answer & explanation
Correct answer: C
Explanation
Given:
First year's interest = ₹2000
Second year's interest = ₹2400
Formula:
First year's interest = P × r / 100
Second year's interest = (P + first interest) × r / 100
2000 = P × r / 100
2400 = (P + 2000) × r / 100
2400 / 2000 = (P + 2000) / P
1.2 = (P + 2000) / P
1.2P = P + 2000
0.2P = 2000
P = 10000
50% of the invested amount = 10000 / 2 = ₹5000