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Question
What principal will amount to Rs.15729 in two years, if the rate of interest for successive years are 5% and 7% respectively, the interest is being compounded annually.
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Solution
Given : Amount = Rs.15729, n = 2 years, r1 = 5 and r2 = 7%
A = `"P"(1 + "r"_1/100)(1 + "r"_2/100)`
⇒ 15729 = `"P"(1 + 5/100)(1 + 7/100)`
⇒ 15729 = `"P"(105/100)(107/100)`
⇒ P = `(15729 xx 100 xx 100)/(105 xx 107)`
⇒ P = Rs.14000.
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