Discussion

Find the amount on Rs.5000 in 2 years, the rate of interest being 4% per first year and 5% for the second year?

Answer: C

\[ A = P\left(1 + \frac{R}{100}\right)^{n}, \qquad \text{CI} = A - P, \qquad \text{SI} = \frac{PRn}{100} \]

The rates differ by year, so multiply the two factors rather than raising one to a power.

\[ A = 5000 \times 1.04 \times 1.05 \]

\[ = 5000 \times 1.092 = \text{Rs. } 5460 \]

The question asks for the amount, so the Rs. 460 of interest is only an intermediate value - and it is offered as the first distractor.

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