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 Rs 5,600. Calcuate.

(i)the rate of interest per annum.

(ii)the amount at the end of the second year.

Answer 1

Solution:-

Amount $=P(1+\frac{r}{100}{)}^t$

$\therefore 5600=5000(1+\frac{r}{100}{)}^1$

$\frac{56}{50}=1+\frac{r}{100}$

$\Rightarrow \frac{6}{50}=\frac{r}{100}$

$\Rightarrow r=12$

Amount after two years = $5000(1+\frac{12}{100}{)}^2$

$=5000(1+\frac{3}{25}{)}^2$

$=\frac{5000\times 28\times 28}{25\times 25}=6272$