Shortcut Trick
Effective interest rates for 4 years: Scheme 1 = 32%, Scheme 2 = 40%
Let Scheme 2 investment be x, then Scheme 1 investment is (20000 − x).
40% of x − 32% of (20000 − x) = 2240
72% of x − 6400 = 2240 ⇒ x = 8640 ÷ 0.72 = 12000
∴ The correct answer is ₹12,000.
Alternate Method
Given:
Total Investment = ₹20,000
Scheme 1: Rate (R1) = 8%, Time (T) = 4 years
Scheme 2: Rate (R2) = 10%, Time (T) = 4 years
Difference in Interest (I2 − I1) = ₹2,240
Formula Used:
Simple Interest (SI) = (P × R × T) ÷ 100
Total Investment = ₹20000
Scheme 1: ₹(20000 − x)
R = 8%, T = 4 yrs
Scheme 2: ₹x
R = 10%, T = 4 yrs
I₂ − I₁ = ₹2240
Calculations:
⇒ Let the amount invested in Scheme 2 be ₹x.
⇒ Amount invested in Scheme 1 = ₹(20000 − x).
⇒ Interest from Scheme 2 (I2) = (x × 10 × 4) ÷ 100 = 40x ÷ 100
⇒ Interest from Scheme 1 (I1) = ((20000 − x) × 8 × 4) ÷ 100 = (640000 − 32x) ÷ 100
⇒ Given, I2 − I1 = 2240
⇒ (40x ÷ 100) − ((640000 − 32x) ÷ 100) = 2240
⇒ (40x − 640000 + 32x) ÷ 100 = 2240
⇒ 72x − 640000 = 224000
⇒ 72x = 864000
⇒ x = 12000
∴ The correct answer is ₹12,000.
Additional Information
Effective Rate of Interest
When simple interest is calculated for T years at R% per annum, the effective interest rate can be computed directly as (R × T)%.
Total Interest from Multiple Investments
When a principal P is split into multiple parts P1, P2, ..., Pn invested at rates R1, R2, ..., Rn, total SI = (P1R1T1 + P2R2T2 + ... + PnRnTn) ÷ 100.
Compound Interest vs Simple Interest
Simple Interest is calculated only on the principal amount, whereas Compound Interest is calculated on the principal and the accumulated interest. For the 1st year, SI and CI are equal if compounded annually.