Question

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

• A. $200$
• B. $205$
• C. $210$
• D. $215$

Answer 1

Answer: (B)

$205$

Given:

Principal(P)$=2000$

Rate of interest(r)$=5\%$

Number of years$=2\left(semiannually\right)$

Formula:

$Amount\left(A\right)=P(1+\frac{r}{100}{)}^2$

$\Rightarrow A=2000(1+\frac{5}{100}{)}^2$

$\Rightarrow A=2000\times (1.05{)}^2$

$\Rightarrow A=2205$

Compound Interest$=A-P$

$=2205-2000$

$=205$

Therefore, compound interest$=205.$