# Word Problem 7

**Problem 7: The rate of compound interest for Rs 1000 for the first year is 5% pa, and for the second year it is 6% pa. What will be the amount of interest after 2 years?**

simple arithmetic questions and answers

**Solution:**

There are two terms of interest calculation. For first term rate of interest is 5 and for second terms it is 6. While principal amount 1000 Rs is for 1st term, and for second term the principal amount will be 1000+Interest of first term !

1st Case

Principal Amount = P = 1000 Rs

Rate of Interest = R= 5 % per annum

Term of Interest Implication = T= 1 Year

We know,

We know that,

Case 2

Now, amount of first case A=1050 Rs will be principal amount for second term

So,

Principal amount P=1050

Term =T= 1 year

Rate of interest R= 6% pa

Again using

**So total amount of interest ;**