Question

A sum of Rs. 13,500 is invested at 16% per annum compound interest for 5years. Calculate :
(i) the interest for the first year.
(ii) the amount at the end of first year.
(iii) the interest for the second year, correct to the nearest rupee.

Answer 1

For 1^st year :

P = Rs. 13,500; R = 16% and T = 1 year

Interest = Rs. `[13,500 xx 16 xx 1]/[100]`= Rs. 2,160

Amount = Rs. 13,500 + Rs. 2,160= Rs. 15,660

For 2^nd year :

P = Rs. 15,660; R = 16% and T = 1 year

Interest = Rs. `[15,660 xx 16 xx 1]/[100]`= Rs. 2,505.60 = Rs. 2,506