Question

What principal will amount to Rs. $38,976$ in two years, if the rates of interest for successive years are $16$% and $20$% respectively?

• A. $27000$
• B. $28000$
• C. $29000$
• D. $30000$

Answer 1

Answer: (B)

$28000$

$A=P(1+\frac{r}{100}{)}^n$

for $r=16$ and $n=1$

$A=P(1+\frac{16}{100}{)}^1$

$A=1.16P$

Again for $r=20,n=1,P^{\prime }=1.16P$

$A=P^{\prime }(1+\frac{r}{100}{)}^n$

$A=1.16P\times 1.2=1.392PA=Rs.38976=1.392P⟹P=28000$