Question

Compound interest on ₹ 62,500 for $1\frac{1}{2}$ years at the rate of 8% per annum, compounded half yearly is

• A. ₹ 7,786
• B. ₹ 7,804
• C. ₹ 7,825
• D. ₹ 7,854

Answer 1

The correct option is B

₹ 7,804

Here, Principal (P) = ₹ 62,500; Time (n) = 3 [As $1\frac{1}{2}$ years has 3 half years in it)

Rate of interest (R) = 4% [rate of interest of 8% per annum is equivalent to 4% per half year, as interest is compounded half yearly]
$\text{Amount (A)}=P{(1+\frac{R}{100})}^n$

$=62500{(1+\frac{4}{100})}^3$

$=62500{(1+\frac{1}{25})}^3$
$=62500{\left(\frac{26}{25}\right)}^3$

$=62500\times \frac{26}{25}\times \frac{26}{25}\times \frac{26}{25}$
$=₹70,304$

Compound Interest (C.I) = A - P
= ₹ 70,304 - ₹ 62,500
= ₹ 7,804