The sum of money that yields a compound interest on 420 rs during the second year at 5% per annum is
Answers
The total sum of money that yields 420 rs in 2nd year at 5% rate is Rs 8000.
Explanation:
Let P be the net principal deposited,
For compound interest we know that,
A = P[ 1 + R/100]^T
After first year the net amount generated is,
A = P[ 1 + R/100]¹
= P(1 + 5/100)
= 1.05P
Considering this as the principal for 2nd year,
Net amount generated after 2nd year
= 1.05P(1+ 5/100)
= 1.1025 P
Hence interest generated in the 2nd year only
= 1.1025P - 1.05 P
= 0.0525 P
Given this interest is equal to rs 420.
=> 0.0525 P = 420
=> P = 420/0.0525
=> P = 8000 rs
Hence the sum of money that will give 420 rs in 2nd year at 5% rate is Rs 8000.
Answer is Rs. 8000
Let P= Principal amount,
Then, compound interest,
A = P [ 1 + R/100]T
After first year the net amount generated is,
A = P[ 1 + R/100]¹
= P(1 + 5/100)
= 1.05P
Principal for 2nd year=1.05P
Net amount generated after 2nd year
= 1.05P (1+ 5/100)
= 1.1025 P
Hence interest generated in the 2nd year only
= 1.1025P - 1.05 P
= 0.0525 P
Given this interest is equal to Rs. 420.
0.0525 P = 420
P = 420/0.0525
P = Rs. 8000
Hence the sum of money that will give Rs. 420 in 2nd year at 5% rate is Rs. 8000.