Question

Find the amount which Ram will get on ₹ 4,096 if he gave it for 18 months at $12\frac{1}{2}\%$ per annum and interest is compounded half yearly.

• A. ₹ 4,913
• B. ₹ 5289
• C. ₹ 4356
• D. ₹ 5634

Answer 1

The correct option is A

₹ 4,913

Here, Principal (P) = ₹ 4,096

Rate of interest (R) = $\frac{25}{4}\%$ (rate of interest of $12\frac{1}{2}\%$ per annum is equivalent to a rate of interest of $\frac{25}{4}\%$ per 6 months, as interest is compounded half yearly)
Time (n) = 3, as 18 months has three 6 months in it.

$Amount\left(A\right)=P{(1+\frac{R}{100})}^n$

=$4096{(1+\frac{25}{4\times 100})}^3$

=$4096{(1+\frac{1}{4\times 4})}^3$
=$4096{\left(\frac{17}{16}\right)}^3$

=$4096\times \frac{17}{16}\times \frac{17}{16}\times \frac{17}{16}$
= ₹ 4,913