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Question
Find the amount of Rs 12500 for 2 years compounded annually, the rate of interest being 15% for the first year and 16% for the second year.
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Solution
Given:
P = Rs 12, 500
R_1 = 15 % p. a.
R_2 = 16 % p. a.
∴ Amount after two years =P\[\left( 1 + \frac{R_1}{100} \right)\left( 1 + \frac{R_2}{100} \right)\]
= Rs \[12, 500\left( 1 + \frac{15}{100} \right)\left( 1 + \frac{16}{100} \right)\]
= Rs \[12, 500\left( 1.15 \right)\left( 1.16 \right)\]
= Rs 16, 675
Thus, the required amount is Rs 16, 675.
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