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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?

A
₹ 4221.30
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B
₹ 4200
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C
₹ 5230
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D
₹ 6132.50
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Solution

The correct option is A ₹ 4221.30
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

Amount = P[(1+r100)n]

Amount=3000[(1+5100)7]

Amount=3000[(2120)7]

Amount= 4221.30

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