Question

By using the formula, find the amount and compound interest on: Subhalaxmi took a loan of Rs. 18000 from Surya Finance to purchasea TV set. If the company charges compound interest at $12\%$ per annum during the first year and $12\frac{1}{2}\%$ per annum during the second year, how much will she have to pay after 2 years ?

Answer 1

$\text{Amount of loan taken (P) = Rs. 18000}\text{Rate}\left(R_1\right)=12\%\text{p.a. during first year}{R}_1=12\frac{1}{2}\%=\frac{25}{2}\%\text{p.a. during second year}\text{Period (n) = 2 years}\therefore \text{Total amount (A)}=P{(1+\frac{R_1}{100})}^1{(1+\frac{R_2}{100})}^1=Rs.18000(1+\frac{12}{100})(1+\frac{25}{2\times 100})=Rs.18000\times \frac{28}{25}\times \frac{9}{8}=Rs.22680$