Multiple choice

A sum of ₹20,000 is invested at 10% per annum. The interest is compounded annually. The compound interest earned in 2 years is reinvested at the same rate but on simple interest for 2 more years. Find the total amount received at the end of 4 years.

  1. ₹24,200

  2. ₹25,040

  3. ₹26,200

  4. ₹27,200

  5. None of these

Reveal answer Fill a bubble to check yourself
B Correct answer
AI explanation

The compound interest earned on 20000 at 10 percent for two years is 20000 multiplied by 0.21, which equals 4200. When reinvesting this interest at 10 percent simple interest for two years, the additional interest earned is 4200 multiplied by 0.10 multiplied by 2, totaling 840. Adding the matured principal of 24000 from the first scheme and the reinvested principal plus its interest of 5040 gives a final total of Rs. 25040.