Multiple choice

Directions: Study the given information carefully to answer the question that follows: Two friends A and B invested Rs. 20,000 and Rs. 15,000, respectively for a period of 3 years. A put the money in a fixed deposit at a compound rate of 8.5% p.a. while B put his money in mutual fund which gave him 12.5% compounded annually. What was the total amount received by B after 3 years if he had to pay 1% to his Mutual Fund Adviser as a commission on the interest earned by him?

  1. Rs. 21,193.85

  2. Rs. 21,239.85

  3. Rs. 22,193.85

  4. Rs. 21,293.85

  5. Rs. 22,119.85
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

B's investment = 15000, rate = 12.5%, time = 3 years. Amount = 15000 * (1.125)^3 = 15000 * 1.423828 = 21357.42. Interest = 21357.42 - 15000 = 6357.42. Commission = 1% of 6357.42 = 63.57. Total amount = 21357.42 - 63.57 = 21293.85.

AI explanation

The compound interest on B's investment is 15000 times ((1 + 0.125) cubed minus 1), which is 15000 times (1.423828125 minus 1) = Rs. 6357.42. A 1% commission on this interest is 63.57, leaving a net interest of 6357.42 minus 63.57 = Rs. 6293.85. Adding this net interest to the principal of 15000 gives a total amount of Rs. 21,293.85.

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