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. Find the amount at the end of the second year.

Answer 1

Simple Interest $,I=\frac{PNR}{100}$
Here for first year,
$P=$ Rs. $5,000$
$N=1$ year
$R=R\%$
So, Interest at the end of 1st year $I=A-P=5,600-5,000=$ Rs. $600$
$\Rightarrow 600=\frac{5,000\times 1\times R}{100}$
$\Rightarrow R=12\%$
And for the second year,
$P=$ Rs. $5,600$
$N=1year$
$R=12\%$
So, Interest at the end of 2nd year $=\frac{5,600\times 1\times 12}{100}=$ Rs. $672$
And Amount at the end of 2nd year $=$ Rs. $5,600+$ Rs. $672=$ Rs. $6,272$