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Three different finance companies declare fixed annual rate of interest on the amount invested with them by investors. The rate of interest offered by these companies may differ from year to year depending on the variation in the economy of the country and the banks rate of interest. The annual rate of interest offered by the three companies P, Q, and R over the year are shown by the line-graph provided below.
Annual Rate of Interest Offered by three Finance
Companies Over the Years
An investor invested a sum of ₹ 12 lakh in company P in 2008. The total amount received after one year was reinvested in the same company for one more year. The total appreciation received by the investor on his investment was
Amount received from Company P after one year (i.e., in 2009) on investing Rs. 12 lakhs in it
Rs. [12 + (8% of 12)] lakhs
= 12.96 lakhs
Amount received from Company P after one year on investing Rs. 12.96 lakhs in the year 2009:
= Rs. [12.96 + (10% of 12.96)] lakhs
= 14.256 lakhs
Appreciation received on investment during the period of two years
= Rs. (14.256 - 12) lakhs
= Rs. 2.256 lakhs
= Rs. 2,25,600.
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