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Question

Calculate the amount and compound interest, if principal is 2000, rate is 5% (rate is applied semi-annually) compounded semiannually.

A
200
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B
205
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C
210
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D
215
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Solution

The correct option is A 205
Given:
Principal(P)=2000
Rate of interest(r)=5%
Number of years=2(semiannually)
Formula:
Amount(A)=P(1+r100)2
A=2000(1+5100)2
A=2000×(1.05)2
A=2205
Compound Interest=AP
=22052000
=205
Therefore, compound interest=205.

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