Question

Find the compound interest of $500$ for $1$ year, compounded semi-annually at the rate of $3$ $\%$ per six months.

• A. $20.50$
• B. $10.45$
• C. $30.45$
• D. $42.89$

Answer 1

The correct option is C $30.45$

Principal $=500$, $R=3\%$, $n=2$ (semiannually compounded),
$t$ $=1$ year

Using the formula, we have
$A=P{(1+\frac{R}{100})}^{n.t}$
$A=500{(1+\frac{3}{100})}^{2.1}$
A $=500\times (1.03{)}^2$
A $=500\times 1.0609$
Amount $=530.45$

Compound interest $=$ Amount $-$ Principal
$=530.45-500$

Compound interest $=30.45$