Peter invested ₹ 2,40,000 for 2 years at 10% per annum compounded annually. If 20% of the accrued interest at the end of each year is deducted as income tax, find the amount he received at the end of 2 years.

For first year :

P = ₹ 2,40,000

T = 1 year

R = 10%

I = $\dfrac{P \times R \times T}{100}$

$= \dfrac{240000 \times 10 \times 1}{100}$ = ₹ 24,000.

Income tax deducted = 20% of Interest

= $\dfrac{20}{100} \times 24000$ = ₹ 4,800

Interest after deduction = ₹ 24,000 - ₹ 4,800 = ₹ 19,200.

Amount = P + I = ₹ 2,40,000 + ₹ 19,200 = ₹ 2,59,200.

For second year :

P = ₹ 2,59,200

T = 1 year

R = 10%

I = $\dfrac{P \times R \times T}{100}$

$= \dfrac{259200 \times 10 \times 1}{100}$ = ₹ 25,920.

Income tax deducted = 20% of Interest

= $\dfrac{20}{100} \times 25920$ = ₹ 5,184.

Interest after deduction = ₹ 25,920 - ₹ 5,184 = ₹ 20,736.

Amount = P + I = ₹ 2,59,200 + ₹ 20,736 = ₹ 2,79,936.

Hence, final amount received at the end of 2 years = ₹ 2,79,936.