What is the compound interest for 1 year on a sum of Rs. 18000 at the annual rate of 20 percent per annum compounding half yearly?
Answer & explanation
Correct answer: option 1
Compound interest compounded half yearly ,
So , Rate = \(\frac{20 }{2}\)% = 10%
t = 2
Compound interest = Principal × ( 1 + \(\frac{rate }{100}\) )t - Principal
= 18000 × ( 1 + \(\frac{10 }{100}\) )2 - 18000
= 18000 × \(\frac{11 }{10}\) × \(\frac{11 }{10}\) - 18000
= 21780 - 18000
= Rs.3780