Question

What principal will amount to Rs. $9856$ in two years, if the rates of interest for successive years are $10$% and $12$% respectively.

Answer 1

Let the Principal was P

For first year, $R=10\%$

Interest $=\frac{PTR}{100}=\frac{P\times 1\times 10}{100}=0.1P$

Amount at the end of 1st year $=P+0.1P=1.1P$

For second year,

Principal $=1.1P$

$R=12\%$

Interest $=\frac{PTR}{100}=\frac{1.1P\times 1\times 12}{100}=0.132P$

Amount at the end of 1st year $=1.1P+0.132P=1.232P$

$\Rightarrow 9856=1.232P$

$\Rightarrow P=\frac{9856}{1.232}$

$\Rightarrow P=Rs.8000$

Hence Principal was Rs.8000