Question

What principal will amount to Rs. 9,856 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 = $\frac{P\times T\times R}{100}$ = $\frac{P\times 1\times 10}{100}$ = 0.1P
Amount at the end of 1st year = P + 0.1P = 1.1P

For 2nd year,
Principal = 1.1P
R = 12%
Interest = $\frac{P\times T\times R}{100}$ = $\frac{1.1P\times 1\times 12}{100}$ = 0.132P

Amount at the end of 2nd year = 1.1P + 0.132P = 1.232P

It is given that amount is 9856

⇒1.232P = 9856

⇒ P = $\frac{9856}{1.232}$

⇒ P = Rs. 8000