Multiple choice

In a particular investment scheme, the compound rate of interest is 25% per annum. But if a person withdraws past invested amount, the interest is calculated for the remaining period and on the remaining amount. If the person deposits Rs. P in the scheme and withdraws 36% of the amount at the end of every two years, then what will be the principal at the beginning of the 23rd year?

  1. Rs. 1.2P

  2. Rs. 0.64P

  3. Rs. 1.5P

  4. Rs. P

  5. Rs. 1.625P
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Over two years, the amount becomes P x 1.25^2 = 1.5625P. Withdrawing 36% leaves 64%, so the amount at the start of each two-year period remains 1.5625P x 0.64 = P. Therefore, it is still P at the beginning of the 23rd year.

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