Question

A sum of Rs.7500 is invested for 2 years at 6% p.a, compounded
annually. Calculate:
i. The amount at the end of the second year.
ii. The interest earned at the end of second year.

Answer 1

Answer:

i) 8427

ii) 477

Step-by-step explanation:

we can solve this problem by two method

• first by using simple interest
• second by compound interest

lets solve it using simple interest

interest at the end of first year = prt

=7500×6×1/100

i1 =450

amount at first year = p + si

= 7500+450

= 7950

now ,

interest at the end of second year = (p1)rt

= 7950×6×1/100

i2 = 477 interest earn the end of second year

amount at the end of second year = p1 +i2

= 7950 + 477

= 8427. amount at the end of second year

now solve using compound interest formula

A = P ( 1 + r/100 )^t

A = 7500 ( 1 + 6/100)^2

A = 7500 ( 1.06)^2

A = 7500 × 1.1236

A = 8427 amount at the end 2nd year

CI = amount at the end 2nd year - amount of 1st year

= 8427 - P ( 1 + r/100 )^1

= 8427 - 7500(1 + 6/100)

= 8427 - 7500(1.06)

= 8427 - 7950

= 477 compound interest of second year