Question

a person invests Rs 5000 for two years at a certain rate of interest compounded annually. At the end of one year, this sum amounts to Rs5,600.calculate 1) the rate of interest per annum 2)the amount at the end of the second year

Answer 1

At the end of 1 year the amount is 5600

So interest will be 5600 - 5000 = 600

Now, x% of 5000 = 600

So, x/100 * 5000= 600

x = 600/50

x = 12

So rate = 12%

Amount at the end of 2nd year = P ( 1+r/100 )^2

= 5000 ( 1+12/100)^2

= 5000 ( 112/100)^2

= 5000 (56/50)^2

= 5000 * 56/50 * 56/50

= 56*56*2

= 6272