Question

A person invests $₹5,000$ for two years at a certain rate of interest compounded annually. At the end of one year, this sum amounts to $₹5,600$.

Calculate : (i) the rate of interest per year. (ii) the amount at the end of the second year.

Answer 1

Principal $\left(P\right)=₹5,000$

Time $=2Years$

Amount at the end of one year $=₹5,600$

Interest for the first year $=A–P$

$=₹5600–₹5000=₹600$

(i) $Rateofinterest=\frac{(Simpleinterest\times 100)}{(Principal\times Time)}$

$=\frac{600\times 100}{5000\times 1}=12\%$

(ii) Principal for the second Year $=₹5,600$

Interest for the second year $=\frac{5600\times 12\times 1}{100}$

$=₹672$

Amount at the end of the second year$=Principal+Simpleinterest$

$=5600+672$

$=₹6272$