Question

On compound interest with a growing principal
11. A person invests Rs 5,600 at 14% p.a. compound interest for 2 years. Calculate
(i) the interest for the first year (ii) the amount at the end of the first year
(iii) the interest for the second year, correct to the nearest rupee
​

Answer 1

Answer:

For the first year:

P= Rs. 5,600, N=1 year and R=14%

We have S.I. =

100

PNR

=

100

5,600×1×14

= Rs. 784

And Amount at the end of first year P+S.I.= Rs. 5,600+ Rs. 784= Rs. 6,384

Now, for the second year :

P= Rs. 6,384, N=1 year and R=14%

We have S.I.=

100

PNR

=

100

6,384×1×14

= Rs. 893.76

To the nearest rupee, it is Rs. 894.