Question

Calculate the amount on ₹1000 over a period of 1 year 6 months at 20% per annum if interest is compounded half yearly.

• A. 1331

Answer 1

The correct option is A 1331
Given,
Principal = ₹ 1000
Interest rate per annum = 20%
Interest rate half yearly = $\frac{20}{2}$ = 10 %

Since the interest is compounded half yearly, there will be three conversion periods in one year and six months.
So, n = 3

By using formula for compound interest, we can write

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

$\text{Amount}=1000\left[{(1+\frac{10}{100})}^3\right]$

$\text{Amount}=₹1331$