Question

Sachin invest rs.200000 for 2 years for 12% p.a compounded annually if the interest accrued is subject to income tax at 25% at the end of each year find the amount he received at the end of 2 years.

Answer 1

Answer :

Given Principle amount = Rs . 200000
And
Rate of interest = r = 12% compounded annually
So,
Interest after 1 year = $\frac{200000\times 12\times 1}{100}=2000\times 12=Rs.24000$
And
The interest accrued is subject to income tax at 25% at the end of each year .

So, Income tax on 24000 = 25% of 24000 = $\frac{24000\times 25}{100}$ = Rs. 6000
So,
Principle amount after 1 year and after income tax = 200000 + 24000 - 6000 = 218000
So,
Total interest after second year = $\frac{218000\times 12\times 1}{100}=2180\times 12=Rs.26160$

So, Income tax on 26160 = 25% of 26160 = $\frac{26160\times 25}{100}$ = Rs. 6540
So,
Amount after 2year and after income tax = 218000 + 26160 - 6540 = Rs .237620 ( Ans )