Question

Mahadevan took out a loan of 5,000 rupees from a tank, which charges compound interest. The rate of interest was 10% for the first year, but it was increased to 12% during the second year. How much money should Mahadevan pay at the end of two years to settle the debt?

Answer 1

Principal, P = Rs.5000

Rate of interest for the first year, R₁= 10%

Rate of interest for the second year, R₂= 12%

Total amount including interest =

∴ Total amount including interest for the first year

Now, principal for the second year = Rs.5500

Total amount including interest for the second year

∴ Total amount to be paid by Mahadevan at the end of two years to settle the debt = Rs.6160