MS Saxena takes a loan of Rs. 5000 at the beginning of a year at the compound interest rate of 25/2% p.a. She takes another loan of rupees 5000 at the beginning of the next year at the same rate of compound interest. What is her total debt at the end of the two years?
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Answer:
In case 1:
P=5000
R=25/2%
T=2 year
A=P(1+R/100)ⁿ
=5000(1+25/200)²
=5000(1+1/8)²
=5000*9/8*9/8
=6328.125
In case 2,
P=5000
R=25/2%
T=1 year
A=5000(1+1/8)
=5000*9/8
=5625 Rs.
Total debt=6328.125+5625=Rs. 11953.125