Shubhalaxmi took a loan of Rs. 18000 from Surya Finance to purchase a TV set. If the company charges compound interest at 12% per annum during the first year and 12 % per annum during the second year, how much will she have to pay after 2 years?

Question

Philoid · Accepted Answer

Present value = Rs.18000

Interest rate for 1^st year, p = 12 % per annum

Interest rate for 2^nd year, q = (25/2) % per annum

Time = 2 years

Amount (A) = P × (1 + p/100) × (1 + q/100)

A = 18000 × (1 + 12/100) × [1 + (25/2)/100]

= 18000 × (112/100) × [1 + 25/200]

= 18000 × (112/100) × [1 + 1/8]

= 18000 × 112/100 × 9/8

= 180 × 112 × 9/8

= 180 × 14 × 9

= 22680

∴ Amount = Rs.22680

∴ Shubhlaxmi has to pay Rs.157464 after 2 years.

Shubhalaxmi took a loan of Rs. 18000 from Surya Finance to purchase a TV set. If the company charges compound interest at 12% per annum during the first year and 12% per annum during the second year, how much will she have to pay after 2 years?