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
• B. ₹ 1006
• C. ₹ 1123.5
• D. ₹ 1050

Answer 1

The correct option is A ₹ 1005.68

Given
Principal = ₹ 500
Interest rate per annum(r) = 30%
Interest rate half yearly = $\frac{30}{2}$ = 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

$\text{Amount = P}\left[{(1+\frac{r}{100})}^n\right]$

$\text{Amount}=500\left[{(1+\frac{15}{100})}^5\right]$

$\text{Amount}=₹1005.68$