A man invests Rs. 5000 for 3 years at 5% p.a. compound interest recko…

Question

A man invests Rs. 5000 for 3 years at 5% p.a. compound interest reckoned yearly. Income tax at the rate of 20% on the interest earned is deducted at the end of each year. Find the amount at the end of the third year = ?

Accepted Answer

Option A. Rs. 5624.32. Answer & Solution Answer: Option A Solution: & C .I . earned during 1^ st year & = \, Rs . [ 5000 ( 1 + 5100 ) - 5000 ] & = Rs . ( 5250 - 5000 ) & = Rs . 250 & Amount after 1^ st year & = Rs . ( 5250 - 20\% of 250 ) & = Rs . ( 5250 - 50 ) & = \, Rs .\, 5200 & C .I . earned durin…