Keinstein Fisheries borrowed some money to grow their business. They borrowed $2,000 at compound interest of 5% per annum for 1 year. Thereafter, they took another loan at simple interest for 2 years, such that they had to pay simple interest equal to half the amount of compound interest paid by them earlier. What would be the amount of money borrowed by them at 4% rate per annum?

Using the compound interest formula for the first loan, the interest equals $2000 * 5% * 1 = $100. The simple interest paid on the second loan is half of this amount, which is \$50. Applying the simple interest formula, Interest = Principal * Rate * Time, we get 50 = Principal * 4% * 2, and solving for the principal gives 50 / 0.08 = \$625.

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