Question

Rahim borrowed ₹10,24,000 from a bank for one year. If the bank charges interest of 5% per annum, compounded half-yearly, what amount will he have to pay after the given time period. Also, find the interest paid by him.

Answer 1

Borrowed amount by Rahim (P) = ₹10,24,000
Time period (T) = 1 yr
Interest rate (R) = 5 % per annum compounded half-hearly
Let amount = A
For compounded half- yearly, A = $P{(1+\frac{R}{200})}^{2T}=10,24,000{(1+\frac{5}{200})}^{2\times 1}=10,24,000{(1+\frac{5}{200})}^2$
[$\because$ in half - yearly , $R=\frac{R}{2}andT=2T]$
$=10,24,000\times \frac{41}{40}\times \frac{41}{40}=640\times 41\times 41=₹10,75,840$
$\therefore$ Compound Interst,
CI = A - P = ₹10,75,840 - ₹10,24,000 = ₹51,840