Question

A man invests ₹ 5,600 at 14% per annum compound interest for 2 years. Calculate:

1. the interest for the first year.
2. the amount at the end of the first year.
3. the interest for the second year, correct to the nearest rupee.

Archana invests ₹ 5,600 at 14% p .a. compound interest for 2 years. Calculate:

1. the interest for the 1st year; 
2. the amount at the end of the 1st year; 
3. the interest for the 2nd year, correct to the nearest ₹.

Answer 1

i. For 1^st years

P = Rs. 5600

R = 14%

T = 1 year

`I = (PxxRxxT)/100`

I = `[5600 xx 14 xx 1]/[100]`

= Rs. 784

ii. Amount at the end of the first year = Principal for first year + Interest

= 5600 + 784

= Rs. 6384.

iii. For the first year:

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

We have,

S.I. = `"PNR"/100`

= `(5,600 × 1 × 14)/(100)` 

= Rs. 784

Amount at the end of first year P + S.I.

= Rs. 5600 + Rs. 784 

= Rs. 6,384.

Now for the second year:

For 2^nd year

P = 6384,

R = 14%,

N = 1 year

S.I. = `(PxxNxxR)/100 `

= `(6,384 xx 14 xx 1)/100`

= Rs. 893.76

To the nearest rupee, it is Rs. 894 nearly.