Compound Interest Different Rates


 
 
Concept Explanation
 

Compound Interest Different Rates

Calculation of Compound Interest when Interest is Compounded Annually but Rates being Different for Different Years:

large Let ;the ;principal; be; P and ;rates; being ;R_1,;R_2,;R_3,;R_4; for;different;years

Amount = P; left [ 1+frac{R_1}{100} right ];times left [ 1+frac{R_2}{100} right ];times left [ 1+frac{R_3}{100} right ]

Illustration: Find the amount after two years compounded annually when rate of interest for first year is 5% and 15% for the next year when the principal is Rs. 4000.

Solution:   large Amount = P; left [ 1+frac{R_1}{100} right ];times left [ 1+frac{R_2}{100} right ];

large Amount = 4000; left [ 1+frac{5}{100} right ];times left [ 1+frac{15}{100} right ]

large Amount = 4000; left [ 1+frac{1}{20} right ];times left [ 1+frac{3}{20} right ]

large Amount = 4000; left [ frac{21}{20} right ];times left [ frac{23}{20} right ]

large Amount= Rs;4830

Sample Questions
(More Questions for each concept available in Login)
Question : 1

If the rate of compound interest for the first, second and third year be 8%, 10% and 15% respectively, find the amount and the compound interest on $ 12,000 in 3 years.

Right Option : D
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Question : 2

Find the amount of $12,500 for 2 years compounded annually, the rate if interest being 15 % for the 1st year and 16 % for the second year.

Right Option : A
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Question : 3

A company offers the following growing rates of compound interest annually to the investors on successive years of investment : 4%, 5% and 6%. A man invests Rs 25,000 for 3 years. What will be his gain?

Right Option : D
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Explanation
 
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