Find the compound interest on ₹42000 for \(1\displaystyle\frac{1}{2}\) years at 10% p.a. compounded annually.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → ₹6510
With interest compounded annually, the interest of each full year is added to the principal; for the remaining half year, simple interest at half the yearly rate (5%) is taken on the amount reached.
Amount after 1 year \(=42000\times1.10=46200\)
Amount after the next half year \(=46200\times1.05=48510\)
Compound interest \(=48510-42000=\) ₹6510