Find the compound interest, compounding annually on ₹22,500 in 2 years, if the rate of interest is 5% for the first year, and 8% for the second year
Show answer & explanation
Correct answer: A
Explanation
The correct answer is Option 1 i.e. ₹3,015
Given
Principal = Rs.22500
Rate for first year = 5%
Rate for second year = 8%
Time = 2years
For the first year
Compound Intrest = Principal (1 + Rate/100)time
= 22500 × ( 1 + 5/100)1 = 22500 × (105/100)1
= 225 × 105 = Rs. 23625
Assume asRs. 23625 as a Principal
For the Second year
Compound Intrest = Principal (1 + Rate/100)time
= 23625 (1 + 8 /100)1 = 23625 (108/100)
= 945 × 27 = Rs.25515
Now
Amount = principal + intrest
Intrest = Amount - Principal
= 25515 - 22500 = Rs. 3015
Hence Intrest is Rs.3015