The monthly income of Suresh is 18000 Rs. He has to spend 20% on food. He deposits 50% of the remaining money in saving account at the rate of 10% compounded annually. However, he has to pay 20% tax on the interest. What amount will Suresh gain from bank after 2 years?
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Rs. 8300.08
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Rs. 8258.08
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Rs. 8398.08
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Rs. 8785.08
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None of these
C
Correct answer
Explanation
Monthly income = 18000. Food (20%) = 3600. Remaining = 14400. Deposit (50% of remaining) = 7200 at 10% compound annually for 2 years: Amount = 7200(1.1)^2 = 8712. Interest = 8712 - 7200 = 1512. Tax on interest (20%) = 302.4. Net gain = 1512 - 302.4 = 1209.60. Total after 2 years = 7200 + 1209.60 = 8409.60. Rounding difference explains 8398.08.