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.
Solution:
Given:
$\mathrm{P}=\mathrm{Rs} 12,500$
$\mathrm{R}_{1}=15 \%$ p. $\mathrm{a} .$
$\mathrm{R}_{2}=16 \%$ p. $\mathrm{a} .$
$\therefore$ Amount after two years $=\mathrm{P}\left(1+\frac{\mathrm{R}_{1}}{100}\right)\left(1+\frac{\mathrm{R}_{2}}{100}\right)$
$=$ Rs $12,500\left(1+\frac{15}{100}\right)\left(1+\frac{16}{100}\right)$
$=$ Rs $12,500(1.15)(1.16)$
$=$ Rs 16,675
Thus, the required amount is Rs 16,675 .