Question

Calculate the compound interest on $5000$ in $2$ years when the rate of interest for successive years is $6\%$ and $8\%$ respectively.

• A. $724$
• B. $727$
• C. $317$
• D. $239$

Answer 1

Answer: (A)

Interest for the $1^{st}$ year $=Rs$ $\frac{5000\times 1\times 6}{100}=Rs$ $300$

Amount after $1^{st}$ year $=Rs$ $5000+Rs$ $300=Rs$ $5300$

Interest for the $2^{nd}$ year $=Rs$ $\frac{5300\times 1\times 8}{100}=Rs$ $424$

Amount after $2^{nd}$ year $=Rs$ $5300+Rs$ $424=Rs$ $5724$

$\therefore$ Compound Interest $=Rs$ $5724-Rs$ $5000=Rs$ $724$