Question

Find the amount and the compound interest on $Rs.6500$ for $2$ years, compounded annually, the rate of interest being $5\%$ per annum during the first year and $6\%$ per annum during the second year.

Answer 1

For first year

$P=6500,R=5$%, $T=1$

Interest $=\frac{PRT}{100}$

$=\frac{(6500\times 5\times 1)}{100}=325$

Amount $=$ Interest $+$ Principle $=325+6500=Rs.6825$

For second year principle will be amount of previous year (since interest is compounded)

$P=6825,R=6$%, $T=1$

Interest $=\frac{PRT}{100}$

$=\frac{(6825\times 6\times 1)}{100}$

$=Rs.409.5$

Amount$=P+I=6825+409.5=7234.5$

Total interest $=325+409.5=Rs.734.5$

$\therefore$ Amount after $2$ years will be $Rs.7234.5$ and interest $Rs.734.5$