Find the compound interest (in ₹) on a sum of ₹7,500 for 4 years if the rate of interest is 20% per annum for the first two years and 10% per annum for the next two years.(The interest is compounded annually.)
Answer & explanation
Correct answer: option 4
Principal = 7500 , rate = 20% for first 2 year and 10% for next two years. time = 4 year
Amount = P$(1 \;+\; \frac{R}{100})^t$
Compound interest = Amount - Principal
= 7500 × \(\frac{6}{5}\) × \(\frac{6}{5}\) × \(\frac{11}{10}\) × \(\frac{11}{10}\) - 7500
= 13068 - 7500
= 5568