Question : A principal of Rs. 10,000, after 2 years compounded annually, the rate of interest is 10% per annum during the first year and 12% per annum during the second year (in rupees) will amount to:
Option 1: Rs. 12,000
Option 2: Rs. 12,320
Option 3: Rs. 12,500
Option 4: Rs. 11,320
Correct Answer: Rs. 12,320
Solution :
Principal = Rs. 10,000
Rate at first year = 10%
Amount after 2 years= $P(1+\frac{R_1}{100})(1+\frac{R_2}{100})$ to solve this where $P$ is principal, $R_1$ and $R_2$ are the rates of interest per annum for two successive years.
$\therefore$ Amount after two years = $10000(1+\frac{10}{100})(1+\frac{12}{100})$ = 12,320
Hence, the correct answer is Rs. 12,320.
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