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Question

Calculate the amount for ₹ 500 which will accumulate over 2 years 6 months at 30% per annum if the interest rate is compounded half yearly.

A
₹ 1005.68
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B
₹ 1006
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C
₹ 1123.5
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D
₹ 1050
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Solution

The correct option is A ₹ 1005.68
Given
Principal = ₹ 500
Interest rate per annum(r) = 30%
Interest rate half yearly = 302 = 15 %

Since the interest is compounded half yearly, hence there will be five conversion periods in two years and six months.
So, n = 5

By using formula for compound interest, we can write

Amount = P[(1+r100)n]

Amount=500[(1+15100)5]

Amount= 1005.68

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