Smith invested 5000 $f o r t w o y e a r s . F o r t h e f i r s t y e a r, t h e r a t e o f i n t e r e s t w a s$ 78.5)

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Solution

$\Rightarrow$ Smith invested $$ 5000$ for two years.
For first year rate of interest is $7 %$ and for second year is $8.5 %$ .
$\Rightarrow$ Interest at the end of the first year
$\Rightarrow$ $I = 7 % \times 5000 = \frac{7}{100} \times 5000 = $ 350$
$\Rightarrow$ Interest at the end of the second year
$\Rightarrow$ $I = 8.5 % \times (5000 + 350) = \frac{8.5}{100} \times 5350 = $ 454.75$
$\Rightarrow$ Total Interest at the end of the two year period is
$\Rightarrow$ $$ 350 + $ 454.75 = $ 804.75 \approx $ 805$

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