Question

A bank pays 5% rate of interest semi-annually, interest being calculated half yearly. A sum of Rs. 400 is deposited in the bank. The amount at the end of 1 year will be

• A. Rs. 440
• B. Rs. 439
• C. Rs. 441.00
• D. Rs. 442

Answer 1

The correct option is C Rs. 441.00

We know that bank use compound interest So

Total amount will be $A=P{(1+\frac{r}{n})}^{nt}$

$A=$ the future value of the investment/loan, including interest

$P=$ the principal investment amount (the initial deposit or loan amount)

$r=$ the annual interest rate (decimal)

$n=$ the number of times that interest is compounded per year

$t=$ the number of years the money is invested or borrowed for

Here, it is given that semi-annual interest 5% and time period 1 year so we will calculate assuming interest is 5% per year and we will calculate for two years

Now, our intrest will be $\frac{5}{100}=0.05$

Putting all values in equation we get

$A=400{(1+\frac{0.05}{1})}^{1\times 2}=400\times {\left(1.05\right)}^2=441$

So, correct answer will be option C.