Question

Calculate the amount and the compound interest on Rs $4,500$ in $2$ years when the rates of interest on successive years are $10$% and $12$% respectively.

Answer 1

For the first year, on interest being compounded at $R=10$ %, we have
$Amount=P{(1+\frac{R}{100})}^N=4,500\times {(1+\frac{10}{100})}^1=4,500\times 1.1=Rs4,950$
For the second year, $P=Rs4,950$ on interest being compounded at $R=12$ %, we have
$Amount=P{(1+\frac{R}{100})}^N=Rs4,950\times {(1+\frac{12}{100})}^1=Rs4,950\times 1.12=Rs5544$
And $TotalC.I.=A-P=Rs5,544-Rs4,500=Rs1,044$