Question

Find the compound interest on Rs. 2,10,000 in 2 years and the rate of interest for first year is 3% and for second year is 6% per annum.
1. Rs. 20,431
2. Rs. 19,278
3. Rs. 21344
4. Rs. 13,441

Answer 1

Correct Answer - Option 2 : Rs. 19,278

Given

Principal = Rs. 2,10,000

Time = 2 years

Rate of interest for first year = 3% and rate of interest for second year = 6% per annum

Formula used

When the rate of interest is differed for different period, then amount is calculated as follows:

Amount = Principal (1 + r₁%) (1 + r₂%)...... (1 + r_n%)

Where r_1, r₂ and r_n are different period of time 

Calculation

Amount = 2,10,000 (1 + 3%) (1 + 6%)

⇒ 2,10,000 (103/100) (106/100)

⇒ 1.0918 × 2,10,000

⇒ 2,29,278

Compound interest = 2,29,278 - 2,10,000

Rs. 19,278

∴ Compound interest is Rs. 19,278.