Question

Find the amount that David would receive if he invests Rs. 8192 for 18 months at $12\frac{1}{2}\%$ per annum, the interest being compounded half-yearly.

Answer 1

Principal (P) = Rs. 8192
Rate (R) $=12\frac{1}{2}\%=\frac{25}{2}\%$ p.a or $\frac{25}{4}\%$ half-yearly.
Period (n) = 18 months or 3 half years
$\therefore$ Amount $=P{(1+\frac{R}{100})}^n$
$=Rs.8192{(1+\frac{25}{4\times 100})}^3=Rs.8192{\left(\frac{17}{16}\right)}^3$
$=Rs.8192\times \frac{17}{16}\times \frac{17}{16}\times \frac{17}{16}=Rs.9826$