Question

Sheetal deposited $Rs.20000$ in bank, where the interest credit half-yearly. If the rate of interest paid by the bank is $6$% per annum, what amount will she get after $1$ year?

Answer 1

The formula for compound interest, including principal sum, is:

$A=P{(1+\frac{r}{n})}^{nt}$

Where:

$A=$ the future value of the investment/loan, including interest

$P=$ the principal investment amount (the initial deposit or loan amount)

$r=$ the annual interest rate (decimal)

$n=$ the number of times that interest is compounded per unit t

$t=$ the time the money is invested or borrowed for

In our given problem,

$P=$ Rs. $20000$, $r=6\%=0.06$, $n=2$, $t=1$ year

$\therefore$, the amount received after the term of $1$ year will be given by,

$A=20000{(1+\frac{0.06}{2})}^{2\times 1}$

$\Rightarrow A=20000{(1+0.03)}^2$

$\Rightarrow A=20000{\left(1.03\right)}^2$

$\Rightarrow A=$Rs.$21218$

$\therefore$, the amount Sheetal will get after $1$ year is Rs.$21,218$