Question

A Find the amount compounded annually on Rs 25,000 for 2 years if the rates of

interest for two years ore 10 % and 12 % respectively,​

Answer 1

Amount = Rs. 30250 when Rate = 10%

Amount = Rs. 31360 when Rate = 12%

Explanation:

Given

`Principal, P = Rs.\ 25,000`

`Time, t = 2\ years`

`Rate; R_1 = 10\%`

`Rate; R_2 = 12\%`

Number of times (n) = Annually

`n = 1`

Required

Determine the Amount for both Rates

Amount (A) is calculated by:

`A = P(1 + (r)/(n))^(nt)`

When Rate = 10%, we have:

Substitute 25,000 for P; 2 for t; 1 for n and 10% for r

`A = 25000 * (1 + (10\%)/(1))^(1 * 2)`

`A = 25000 * (1 + (10\%)/(1))^(2)`

`A = 25000 * (1 + 10\%)^(2)`

Convert 10% to decimal

`A = 25000 * (1 + 0.10)^(2)`

`A = 25000 * (1.10)^(2)`

`A = 25000 * 1.21`

`A = 30250`

Hence;

Amount = Rs. 30250 when Rate = 10%

When Rate = 12%, we have:

Substitute 25,000 for P; 2 for t; 1 for n and 10% for r

`A = 25000 * (1 + (12\%)/(1))^(1 * 2)`

`A = 25000 * (1 + (12\%)/(1))^(2)`

`A = 25000 * (1 + 12\%)^(2)`

Convert 12% to decimal

`A = 25000 * (1 + 0.12)^(2)`

`A = 25000 * (1.12)^(2)`

`A = 25000 * 1.2544`

`A = 31360`

Hence;

Amount = Rs. 31360 when Rate = 12%