Question

What amount will I get at the end of 3 years and 6 months if I invest ₹ 3000 in a bank with an interest rate of 10% compounded half-yearly?

Answer 1

Given
Principal = ₹ 3000
Rate of interest (r) = 10% p.a.
So, r = 5% compounded half-yearly

Since the interest is compounded half-yearly, there will be 7 conversion periods in 3 years and 6 months.

So, n = 7

By using formula for compound interest, we can write

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

$\text{Amount}=3000\left[{(1+\frac{5}{100})}^7\right]$

$\text{Amount}=3000\left[{\left(\frac{21}{20}\right)}^7\right]$

$\text{Amount}=₹4221.30$