Question

Calculate the compound interest on Rs. 5000 in 2 years; if the rates of interest for successive years be 10% and 12% respectively.

Answer 1

For 1st year
Principal(P) =Rs. 5000, Rate(R)=10%
Time(T)=1 year
$\therefore$ Interest = $\frac{5000\times 10\times 1}{100}=50\times 10=Rs.500$ $\therefore$ Amount at the end of 1st year=Rs. (5000 + 500) =Rs. 5500
For 2nd year
P=Rs. 5550, Rate 12%, T= 1 year
$\therefore$ Interest= $\frac{5500\times 12\times 1}{100}=55\times 12=Rs.660$
$\therefore$ Amount at the end of 2nd year
=Rs. 5500 +Rs. 660 =Rs. 6160
Hence compund interest =Rs. 6160- Rs. 5000
=Rs. 1160