Multiple choice

Abhishek invested P for 2 years in scheme A which offered 20% p.a. compound interest (compounded annually). He lent the interest earned from scheme A to Maneesh, at the rate of 7.5% p.a. simple interest. If at the end of 2 years, Maneesh gave Rs. 3036 to Abhishek and thereby repaid the whole amount (actual loan + interest), what is the value of P?

  1. Rs. 6000

  2. Rs. 5800

  3. Rs. 6800

  4. Rs. 6400

  5. Rs. 5400
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A Correct answer
Explanation

Abhishek invests P at 20% compound interest for 2 years. Amount after 2 years = P(1.20)² = 1.44P. Interest earned = 1.44P - P = 0.44P. This interest is lent to Maneesh at 7.5% simple interest for 2 years. Simple interest = 0.44P × 7.5/100 × 2 = 0.066P. Total amount Maneesh repays = 0.44P + 0.066P = 0.506P. Given this equals Rs. 3036, so P = 3036/0.506 = Rs. 6000.

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