An amount of \ 25,000 in 2 years at compound interest compounded annually, if the interest rate for the succes

Question

An amount of \ 25,000 in 2 years at compound interest compounded annually, if the interest rate for the successive years be 4\% and 5\%$ per annum respectively, is:

Accepted Answer

Given: * Principal ( P ) = \ 25,000 * Rate for 1st Year ( R_1 ) = 4\% * Rate for 2nd Year ( R_2 ) = 5\% The formula for total amount A with successive interest rates is: A = P ≤ft(1 + R_1/100)≤ft(1 + R_2/100) $ A = 25000 ≤ft(1 + 4/100)≤ft(1 + 5/100) A = 25000 × 104/100 × 105/100 A = 250 × 1.04 × 105 A = 260 × 105 = \$27,300 Thus, the final compound amount after 2 years is \ 27,300$.

An amount of $\$ 25,000 $in$ 2 $ye a rs a t co m p o u n d in t eres t co m p o u n d e d ann u a ll y, i f t h e in t eres t r a t e f or t h es u ccess i v eye a rs b e$ 4\% $an d$ 5\%$ per annum respectively, is:

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An amount of \ 25,000in 2yearsatcompoundinterestcompoundedannually,iftheinterestrateforthesuccessiveyearsbe 4\%and 5\%$ per annum respectively, is: