Question

find the amount of rupees 12000 after 2 years, compounded annually ;the rate of interest being 5% per annum during the first year and 6% per annum during the second year. Also, find the compound interest.​

Answer 1

Total FV= $13,356

Explanation:

Giving the following information:

Initial investment (FV)= $12,000

Number of periods (n)= 2 years

Interest rate= 5% first year

Interest rate= 6% second year

To calculate the future value, we need to use the following formula:

FV= PV*(1+i)^n

FV1= 12,000*1.05= 12,600

FV2= 12,600*1.06= $13,356

Total FV= $13,356

Compound interest= (0.05 + 0.06)/2= 0.055