At the end of first year it amounts to ₹ 5325.

Mr. Lalit invested ₹ 75000 at a certain rate of interest, compounded annually for two years. At the end of first year it amounts to ₹ 5325. Calculate
(i) the rate of interest.
(ii) the amount at the end of second year, to the nearest rupee.

Solution:

It is given that
Investment of Mr. Lalit = ₹ 5000
Period (n) = 2 years
(i) We know that
Amount after one year = ₹ 5325
So the interest for the first year = A – P
Substituting the values
= 5325 – 5000
= ₹ 325
Here
Rate = (SI × 100)/ (P × T)
Substituting the values
= (325 × 100)/ (5000 × 1)
So we get
= 13/2
= 6.5 % p.a.
(ii) We know that
Interest for the second year = (5325 × 13 × 1)/ (100 × 2)
By further calculation
= (213 × 13)/ (4 × 2)
So we get
= 2769/8
= ₹ 346.12
So the amount after second year = 5325 + 346.12
We get
= ₹ 5671.12
= ₹ 5671 (to the nearest rupee)

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