A sum of money is invested at a compound interest rate of 8% p.a. for the first year and 10% p.a. for the second year. If the total interest earned is ₹1,872, what was the original principal?
Show answer & explanation
Correct answer: B
Explanation
Given:
First year's rate = 8%
Second year's rate = 10%
Total interest = ₹1,872
By formula:
Amount = P(1 + r₁/100)(1 + r₂/100)
A = P × 1.08 × 1.10
A = 1.188P
Interest = A − P
1872 = 1.188P − P
1872 = 0.188P
P = 1872 ÷ 0.188
P = ₹9957.45