A sum of money is invested at CI for $2$ years. If the interest for the second year is Rs. $660$ and the…

A sum of money is invested at CI for $2$ years. If the interest for the second year is Rs. $660$ and the rate is $10\%$ p.a. (compounded annually), the principal is
  1. Rs. $5{,}500$
  2. Rs. $6{,}000$
  3. Rs. $6{,}500$
  4. Rs. $7{,}000$

Solution

Interest in 2nd year $= 10\%$ of (amount after 1 year) $= 0.10 \times 1.10 P = 0.11 P$. So $0.11 P = 660 \Rightarrow P = 6000$.

Asked in: IMO

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