Question Details

Anil invests Rs 22000 for 6 years in a scheme with 4% interest per annum, com pounded half-yearly. Separately, Sunil invests a certain amount in the same scheme for 5 years, and then reinvests the entire amount he receives at the end of 5 years, for one year at 10% simple interest. If the amounts received by both at the end of 6 years are equal, then the initial investment, in rupees, made by Sunil is:

Options

A

20640

B

20808

C

20860

D

20480

Show Answer

Correct Answer :

Option B

20808

Solution :

The correct option is 20808.

To find the initial investment made by Sunil, we analyze the growth of both investments over the 6-year period and set their final amounts equal.

Step 1: Identify the interest rate per compounding period
The scheme has an annual interest rate of 4% compounded half-yearly.
Since interest compounding occurs twice a year, the rate of interest per half-year period is:
r = 4 % 2 = 2 % = 0.02

Step 2: Calculate the final amount received by Anil
Anil invests Rs 22,000 for 6 years in this scheme.
The number of half-yearly compounding periods over 6 years is:
n A = 6 × 2 = 12
Using the compound interest formula, the total amount received by Anil at the end of 6 years is:
A A = 22000 × ( 1 + 0.02 ) 12 = 22000 × ( 1.02 ) 12

Step 3: Calculate the final amount received by Sunil
Let Sunil's initial investment be P. He invests this amount in the same scheme for 5 years.
The number of compounding periods for Sunil's initial investment is:
n S = 5 × 2 = 10
The accumulated amount Sunil receives at the end of 5 years is:
A S , 5 = P × ( 1.02 ) 10
Sunil then reinvests this entire amount AS,5 for 1 year at 10% simple interest.
The final amount received by Sunil at the end of 6 years is:
A S , 6 = A S , 5 × ( 1 + R × T 100 )
Substituting R=10 and T=1 year:
A S , 6 = A S , 5 × ( 1 + 0.10 ) = 1.1 × A S , 5
Substituting the expression for AS,5:
A S , 6 = 1.1 × P × ( 1.02 ) 10

Step 4: Equate both amounts and solve for P
We are given that the amounts received by both Anil and Sunil at the end of 6 years are equal:
A A = A S , 6
Substitute the values:
22000 × ( 1.02 ) 12 = 1.1 × P × ( 1.02 ) 10
Divide both sides by (1.02)10:
22000 × ( 1.02 ) 2 = 1.1 × P
Now, solve for P:
P = 22000 1.1 × ( 1.02 ) 2
Simplify the division:
22000 1.1 = 20000
This gives:
P = 20000 × ( 1.02 ) 2
Compute the square:
( 1.02 ) 2 = 1.0404
Finally, calculate the value of P:
P = 20000 × 1.0404 = 20808
Therefore, the initial investment made by Sunil is Rs 20,808.

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