Q4 of 48 Page 118

Find the amount and the compound interest on Rs. 6500 for 2 years, compounded annually, the rate of interest being 5% per annum during the first year and 6% per annum during the second year.

Principal (P) for 1st year = Rs. 6500

Rate of interest (R) for first year = 5%


Interest on first year = 5% of 6500


=


= 325


∴ Interest for 1st year = Rs. 325


Principal (P) for second year = Principal (P) for 1st year + Interest for 1st year


Principal (P) for second year = Rs. 6500 + Rs. 325 = Rs. 6825


Rate of interest (R) for second year = 6%


Interest on second year = 6% of 6825


=


= 409.5


∴ Interest for 2nd year = Rs. 409.5


Total interest = Rs. 325+Rs. 409.5 = Rs. 734.5


Amount at second year = Principal (P) for 2nd year + Interest for 2nd year


= 6825+409.5


= 7234.5


∴ Amount at second year = Rs. 7234.5


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