Question

What sum of money yields rs.2655 as interest for second year at 18% p.A. Compound interest, compounded annually?

Answer 1

Answer:

Rs 12500

Explanation:

Interest for the second year year is just given.

So, approach will be different; we have to first find the amount in first year then the interest gained in 2nd year.

Let, P be the sum.

So, Amount in 1 year A = P * [1 + 18/100]

Interest of second year A * 18/100 = 2655

i.e. P * 1.18 * 0.18 = 2655

Hence we get P = Rs 12500