Question

Find the amount and compound interest on ₹ 10000 in 2 years when the rates of interest for the successive years are 6% and 7% respectively.

Answer 1

Given:

• Principal (P) = ₹ 10,000
• Rate of interest for 1st year (r₁) = 6%
• Rate of interest for 2nd year (r₂) = 7%
• Time = 2 years (successive years with different rates)

Step-wise calculation:

1. Formula for amount when rates differ for successive years:

`A = P xx (1 + r_1/100) xx (1 + r_2/100)`

2. Calculate the amount:

`A = 10000 xx (1 + 6/100) xx (1 + 7/100)`

A = 10000 × 1.06 × 1.07

A = 10000 × 1.1342

A = 11342

3. Calculate the compound interest (C.I.):

C.I. = A – P 

C.I. = 11342 – 10000

C.I. = 1342