Question

Find the amount and the compound interest on 50000 for $1\frac{1}{2}$ years at 8% per annum, the interest is compounded semi-annually.

Answer 1

We have the formula for compound Interest,

$A=P(1+\frac{r}{n}{)}^{n.t}$

$A=Totalamount$

$P=Principal=50000$

$r=annualinterestrate=8$%

$n=no.oftimescompoundedperyear=2$, and $t=timeinyears=\frac{3}{2}$

Substituting, $A=50000(1+\frac{0.08}{2}{)}^{2\times \frac{3}{2}}$

$A=50000(\frac{2.08}{2}{)}^3$

$A=56243.2$ This is the amount after $1$ and $\frac{1}{2}$ years

Compound Interest, $I=A-P=56243.2-50000=6243.5$