Question

Find the CI paid when a sum of Rs 20,000 is invested for one year and six months at 5% per annum compounded annually.

• A. Rs 1560
• B. Rs 1530
• C. Rs 1545
• D. Rs 1525

Answer 1

The correct option is D

Rs 1525

The principal is said to be compounded annually, which means that the amount after every one year becomes the principal for the next year. So, amount at the end of one year = 20000(1+$\frac{5}{100}$) = 21000.

So, calculating the interest for next six months = $21000\times \frac{5}{100}\times \frac{1}{2}=Rs.525$

Amount = 21000 + 525 = Rs 21525

Compound interest = Rs 21525 - Rs 20000 = Rs 1525