A person invests Rs. 1000 at 10% annual compound interest for 2 years. At the end of two years, the whole amount is inve...

Question

A person invests Rs. 1000 at 10% annual compound interest for 2 years. At the end of two years, the whole amount is invested at an annual simple interest of 12% for 5 years. The total value of the investment finally is:

A. 1776  B. 1780  C. 1920  D. 1196

Accepted Answer

Final investment value = Rs. 1936 (official key: D) This is a two-phase investment problem. First, the principal earns compound interest for 2 years, turning the original Rs. 1000 into a larger sum. That sum then earns simple interest for 5 years at a different rate. We add the SI to the Phase-1 amount to get the final value.