Question

Arun deposited ₹ 5000 in a bank which compounds interest half yearly at an annual rate of interest is 6%. How much would he get back after two years?

• A. ₹ 5305
• B. ₹ 5306
• C. ₹ 5628
• D. ₹ 5912

Answer 1

The correct option is C ₹ 5628

Arun deposited ₹ 5000 in a bank which compound interest half yearly.
Annual rate = 6%
Since Interest is compounded half yearly, Interest has to be calculated twice a year
Half yearly rate = $\frac{6}{2}$ = 3%
The interest is calculated half yearly for 2 years, hence $t=4$.
$\therefore$ Amount after 2 years $=5000(1+\frac{3}{100}{)}^4$

$=5000\times \frac{103}{100}\times \frac{103}{100}\times \frac{103}{100}\times \frac{103}{100}$
$=5627.54$
= ₹ 5628(.54 paisa rounded to 1 Rupee)