Question

A person invests Rs. 5000 for two years at a certain rate of interest compounded annually. At the end of one year, this sum amounts to Rs. 5600. Calculate:
(i) the rate of interest per year.
(ii) the amount at the end of the second year.

Answer 1

Principal(P)=Rs. 5000
Period(T)=2 years
Amount at the end of one year=Rs. 5600
$\therefore$ Interest for the first year=A-P
=Rs. 5600-5000=Rs. 600
(i) $\therefore$ Rate of interest= $\frac{S.I\times 100}{P\times T}$
$=\frac{600\times 100}{5000\times 1}$=12% p.a.
(ii) Principal for the second year =Rs. 5600
Interest for the second year= $\frac{5600\times 12\times 1}{100}$
=Rs. 672
$\therefore$ Amount at the end of second year
=P+S.I.=5600+672=Rs. 6272