Question 34

Ankur invested a sum of Rs. 16800 for four years in a scheme A. The rate of interest in scheme A is 8% per annum compounded yearly for the first two years and 10% for the third and fourth years compounded yearly. What will be the compound interest at the end of 4 years ?

Solution

We know that, in compound interest, amount A :

=> $$A = P (1 + \frac{R}{100})^T$$

=> $$A = 16800 (1 + \frac{8}{100})^2 (1 + \frac{10}{100})^2$$

=> $$A = 16800 \times (\frac{27}{25})^2 \times (\frac{11}{10})^2$$

=> $$A = 23710$$

$$\therefore$$ C.I. = 23710 - 16800

= Rs. 6,910

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