Question

A person invests Rs. $5,000$ for two years at a certain rate of interest compounded annually. At the end of one year, this sum amounts to Rs. $5,600$. Calculate the rate of interest per year.

Answer 1

Simple Interest $I=\frac{PNR}{100}$
Here for first year,
$P=Rs5,000$
$N=1$ year
$R=R$ %
So, Interest at the end of 1st year $I=A-P=Rs5,600-Rs5,000=Rs600$
$\Rightarrow 600=\frac{5,000\times 1\times R}{100}$
$\Rightarrow R=12$ %