Question

# A person invests $₹5,000$ for two years at a certain rate of interest compounded annually. At the end of one year, this sum amounts to $₹5,600$. Calculate : (i) the rate of interest per year. (ii) the amount at the end of the second year.

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Solution

## Principal $\left(P\right)=₹5,000$Time $=2Years$Amount at the end of one year $=₹5,600$Interest for the first year $=A–P$ $=₹5600–₹5000=₹600$(i) $Rateofinterest=\frac{\left(Simpleinterest×100\right)}{\left(Principal×Time\right)}$ $=\frac{600×100}{5000×1}=12%$(ii) Principal for the second Year $=₹5,600$Interest for the second year $=\frac{5600×12×1}{100}$ $=₹672$Amount at the end of the second year$=Principal+Simpleinterest$ $=5600+672$ $=₹6272$

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