Question

raja invested rs. 77500 in sbi bank. in two years how much compound interest will he get, if the first year rate of interest was 10% and second year had 2% more than first year?

Answer 1

Given : Raja invested Rs. 77500 in SBI Bank

⇒ Principal for the First Year is equal to : 77500

Given : Rate of Interest for the First Year : 10%

We know that : Amount in Compound Interest is given by :

✿  $Amount = P(1 + \frac{R}{100})^n$

Where :

✿  P is the Principal

✿  R is the Rate of Interest

✿  n is the Total Number of Conversion Periods

Here : n = 1, Because we are compounding annually and Calculating the Amount after 1 year of Investment.

$\implies Amount = 77500(1 + \frac{10}{100})\\\\\implies Amount = 77500(1 + \frac{1}{10})\\\\\implies Amount = 77500(1 + 0.1)\\\\\implies Amount = 77500(1.1)\\\\\implies Amount = 85250$

⇒ The Principal for Second Year = Rs. 85250

Given : 2nd year had 2% more than 1st Year

⇒ Rate of Interest for Second year = (10% + 2%) = 12%

Here : n = 1, Because we are compounding annually and Calculating the Amount after One year.

$\implies Amount = 85250(1 + \frac{12}{100})\\ \\\implies Amount = 85250(1 + 0.12)\\\\\implies Amount = 85250(1.12)\\\\\implies Amount = 95480$

⇒ Raja gets an Amount of Rs. 95480 after 2nd Year

⇒ Interest = Amount - Principal

⇒ Interest = (95480 - 77500)

⇒ Interest = 17980

⇒ The Compound Interest Raja gets after 2nd Year is : Rs 17980