Question

Calculate the amount, if ₹15,000 is lent at compound interest for 2 years and the rates for the successive years at 8% p.a. and 10% p.a. respectively.

Answer 1

Hint: Amount yielded from the first year as in simple interest becomes principal sum for the second year when
rate is compounded annually.

Formula used:
$A = P\left( {1 + \dfrac{{{R_1}}}{{100}}} \right)\left( {1 + \dfrac{{{R_2}}}{{100}}} \right)$

Complete step-by-step answer:
Where A – compound amount
P – Principal sum
$R_1$ – rate of interest for first year
$R_2$ – rate of interest for second year
Here, we are given P = ₹15000
$R_1$ = 8 % P.a
$R_2$ = 10% P.a.
Here we will put the values of P, R 1 , R 2 and T in the formula of amount.
Therefore, \[A = 15000\left( {1 + \dfrac{8}{{100}}} \right)\left( {1 + \dfrac{{10}}{{100}}} \right)\]
\[ = 15000 \times \dfrac{{108}}{{100}} \times \dfrac{{110}}{{100}}\]=
= ₹17820.
Thus, the compound amount is ₹17820.

Note: Please note that here the interest is compounded. So, this means to say that we have to apply the formula of compound interest and not that of simple interest.