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?
Answer & explanation
Correct answer: option 2
In 1st year , Rate of interest = 8%
In 2nd year , Rate of interest = 12%
Total rate for 2 years = 8% + 12% + \(\frac{8 × 12}{100}\)%
= 20.96%
So, Interest earned in 2 years = 20.96% of 55000
= \(\frac{20.96}{100}\) × 55000
= Rs. 11528