A principal amount is invested at 12% per annum simple interest for a period of 4 years, 11 months, and 28 days in a scheme. The total amount received from this scheme is then invested for 2 years and 2 days in another scheme at 20% per annum compound interest. The compound interest earned from the second scheme is Rs. 1056.4. Find the approximate amount initially invested in the first scheme?

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  1. 1950
  2. 1850
  3. 1450
  4. 1650
  5. 1500

Answer (Detailed Solution Below)

Option 5 : 1500
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Calculation

We should take approx. values

So, four years 11 months and 28 days = 5 years

Two years 2 days = 2 years

And 1056.4 Rs = 1056

Equivalent rate of interest at rate of 20% p.a. for two years on compound

interest annually = (20 + 20 + ( 20 × 20) / 100 )% = 44%

Let amount invested in first scheme = 100x

So, amount invested in second scheme = 100x + 100x × (12× 5) /100

= 160x 

ATQ, 160x × (44 / 100) = 1056

Or, 1.6x = 24

x = 15

So, 100x = 1500

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