Find CI when interest is compounded annually but Rates are different
To find CI when interest is compounded annually but rates are different, we use the following formula :A = P( 1 + R1)( 1 + R2)... ( 1 + Rn)
Where P = Principal
R 1 ,R 2 ,R 3 ...interest rates percent for different years.
Examples :
1) Roger bought a refrigerator for $ 4000 on credit. The rate of interest for the first year is 5% and of the second year is 15%. How much will it cost him if he pays the amount after two years.
Solution:
Here, P = $ 4000, R 1 = 5% p.a and R 2 = 15% p.a.
∴ Amount after 2 years = P( 1 + R 1 )( 1 + R 2 )
= 4,000 x ( 1 + 0.05) ( 1 + 0.15)
= 4000 x ( 1.05) ( 1.15 )
= 4000 x 1.2075
= $ 4830
∴ The refrigerator will cost $ 4830 to Roger.
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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.
Here, P = $12,500 , R1 = 15 % and R2 = 16 %
∴ Amount after 2 years = P( 1 + R1)( 1 + R2)
= 12,500x ( 1 + 0.15) ( 1 + 0.16)
= 12,500 x ( 1.15) ( 1.16 )
= 12,500 x 1.334
= $ 16,675
∴ Amount = $16,675
Compound Interest(CI)
• Find Compound Interest when interest is compounded Half yearly
• Find Compound Interest when interest is compounded Quarterly
• Find CI when interest is compounded annually but Rates are different
• Finding Principal
• Finding Time Period of Investment
• Finding Rate of Interest