Question
Download Solution PDFAn amount of ₹ 25,000 in 2 years at compound interest compounded annually, if the interest rate for the successive years be 4% and 5% per annum respectively, is:
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFGiven:
Principal (P) = ₹25,000
Interest rates: 4% for the 1st year and 5% for the 2nd year
Time (t) = 2 years
Formula used:
Amount for the first year: A1 = P(1 + r1/100)
Amount for the second year: A2 = A1(1 + r2/100)
Calculations:
A1 = 25000(1 + 4/100)
⇒ A1 = 25000 × 1.04
⇒ A1 = 26000
A2 = 26000(1 + 5/100)
⇒ A2 = 26000 × 1.05
⇒ A2 = 27300
∴ The correct answer is option 1.
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