Find the amount of Rs 12500 for 2 years compounded annually,

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 .

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