Question 60

A person invests ₹55,000 for two years on compound interest such that the rate of interest for the first year is 8% per annum and that for the second year is 12% per annum, and the interest is compounded annually. What is the total interest earned by the person?

Solution

total interest earned by the person = 55000 of (100+8)% of (100+12)% - 55000

= 55000 of 108% of 112% - 55000

= $$55000\times\frac{108}{100}\times\frac{112}{100}-55000$$

= $$11\times54\times112-55000$$

= $$66528-55000$$

= ₹11,528

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