Question

If Amit invests ₹1000 in a bank for an interest rate of 20% compounded half yearly, then he will get as compound interest at the end of 3 years.

• A. ₹772
• B. ₹964
• C. ₹746
• D. ₹814

Answer 1

The correct option is A ₹772

Given,
Principal (P) = ₹1000
Interest rate (r) = 20%
Number of years (n) = 3 years

Since, the interest is compounded half yearly so,
$r=\frac{20}{2}=10\%$
$n=3\times 2=6$

By using the formula for compound interest, we can write

$\text{Amount = P}\left[{(1+\frac{r}{100})}^n\right]$

$\text{Amount}=1000\left[{(1+\frac{10}{100})}^6\right]$

$\text{Amount}=1000\left[{\left(\frac{11}{10}\right)}^6\right]$

$\text{Amount}=₹1772$

Now, Compound Interest
= Amount - Principal
$=₹1772-₹1000=₹772$

Hence, the compound interest is ₹772.