Question

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

Answer 1

Answer:

Amount = Rs. 30250 when Rate = 10%

Amount = Rs. 31360 when Rate = 12%

Step-by-step 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:

$A = P(1 + \frac{r}{n})^{nt}$

When Rate = 10%, we have:

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

$A = 25000 * (1 + \frac{10\%}{1})^{1 * 2}$

$A = 25000 * (1 + \frac{10\%}{1})^{2}$

$A = 25000 * (1 + 10\%)^{2}$

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

$A = 25000 * (1 + \frac{12\%}{1})^{1 * 2}$

$A = 25000 * (1 + \frac{12\%}{1})^{2}$

$A = 25000 * (1 + 12\%)^{2}$

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%