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What Sum of Money Will Amount to Rs 7,128 in 2 Years at Compound Interest, If the Rates of Interest Are 8% and 10% for Successive Years?

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Question

What sum of money will amount to Rs 7,128 in 2 years at compound interest, if the rates of interest are 8% and 10% for successive years?

Sum
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Solution

For the second year 
Here P = x ; A= Rs 7, 128 ; t = 1 year ; r = 10 % p.a. 

`therefore "A" = "P" (1 + "r"/100)^"n"`

`=> "Rs"  7128 = "x" (1 + 10/100)^1`

`=> "Rs"  7128 = "x" (11/10)`

`=> "x" = "Rs"  (7128 xx 10)/11`

⇒  x = Rs 6480 

The sum of money will be Rs 6,480 at the end of the first year or beginning of the second year. 

For the first vear 

Here P = x ; A = Rs 6,480 ; t = 1 year ; r = 8 % p.a.

`therefore "A" = "P" (1 + "r"/100)^"n"`

`=> "Rs"  6480 = "x" (1 + 8/100)^1`

`=> "Rs"  6480 = "x" (108/100)`

`=> "x" = "Rs"  (6480 xx 100)/108 `

⇒ x = Rs 61 000 

The sum of money will be Rs 6,000 at the beginning of the first year. 

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