Question

Find the compound interest on Rs. 25000 after 2 years compounded annually. The rate of

interest being 5% per annum for the first year ad 6% per annum during the second year​

Answer 1

Given:

Present value =₹ 25000

Interest rate for the first year, p=5% per annum

Interest rate for the second year, q=6% per annum

Interest rate for the third year, r=8% per annum

To find the amount we have the formula,

Amount (A)=P(1+(r/100))

n

where P is present value, r is rate of interest, n is time in years

Since here we have variable rates, we modify the formula to get:

Amount (A)=P×(1+p/100)×(1+q/100)×(1+r/100)

Now substituting the values in above formula we get,

∴A=25000×(1+5/100)×(1+6/100)×(1+8/100)

⇒A=25000×(105/100)×(106/100)×(108/100)

$$\Rightarrow A = 21 × 53 × 27$$

⇒A=₹ 30051

∴ Compound interest =A–P

=30051–25000=₹ 5051

more important

Answer 2

Solution!!

For 1st year

Principal (P) = Rs 25000

Time (T) = 1 year

Rate of interest (R) = 5%

Interest = (P × R × T)/100

Interest = (25000 × 5 × 1)/100

Interest = 250 × 5 × 1

Interest = Rs 1250

Amount = Principal + Interest

Amount = Rs 25000 + Rs 1250

Amount = Rs 26250

For 2nd year

The amount in the first year will be the principal in the second year.

Principal (P) = Rs 26250

Time (T) = 1 year

Rate of interest (R) = 6%

Interest = (P × R × T)/100

Interest = (26250 × 6 × 1)/100

Interest = 157500/100

Interest = Rs 1575

Amount = Principal + Interest

Amount = Rs 26250 + Rs 1575

Amount = Rs 27825

On adding the interest of all the years, we will get the compound interest.

CI = Rs 1250 + Rs 1575

CI = Rs 2825

Hence, the compound interest is Rs 2825