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Question

Mohd. Aslam purchased a house from Avas vikas parishad on credit . If the cost of the house is Rs 125000 and the parishad charges interest at 12% per annum compounded half-yearly,find the interest paid by aslam after a year and a half.


Solution

The formula for the amount 'A' on the principal amount 'P' charged at 'r' % per annum for 'n' years is given by-
A = (1 + r/100)ⁿ
Here, P = Rs. 125000, r = 12 % and time = one and a half years.
Since the interest is compounded half yearly.
r = 6 % per half year
time = 3/2 × 2 = 3 half years.
A = 125000 (1 + 6/100)³
⇒ 125000 (1 + 3/50)³
⇒ 125000 (53/50)³
⇒ 125000 × 53/50 × 53/50 × 53/50
⇒ 125000 × 148877/125000
A = Rs. 148877 
So, the amount of interest paid by Mohd. Aslam = 
Interest = A - P
148877 - 125000
Interest = Rs. 23877 

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