Question

A man invests Rs. $5,600$ at $14$% per annum compound interest for $2$ years. Calculate the interest for the second year, correct to the nearest rupee.

Answer 1

For the first year:
$P=$ Rs. $5,600$, $N=1$ year and $R=14\%$
We have $\text{S.I.}=\frac{\text{PNR}}{100}=\frac{5,600\times 1\times 14}{100}=$ Rs. $784$
And Amount at the end of first year $\text{P}+\text{S.I.}=$ Rs. $5,600+$ Rs. $784=$ Rs. $6,384$
Now, for the second year :
$P=$ Rs. $6,384$, $N=1$ year and $R=14\%$
We have $\text{S.I.}=\frac{\text{PNR}}{100}=\frac{6,384\times 1\times 14}{100}=$ Rs. $893.76$
To the nearest rupee, it is Rs. $894$.