Find the compound interest on Rs 10000 for \(1\frac{1}{2}\) years at 20% per annum, the interest being compounded half-yearly.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Rs 3310
With half-yearly compounding, the rate is halved and the number of periods is doubled.
Rate per half-year \(=10\%\); number of half-years in \(1\frac{1}{2}\) years \(=3\)
Amount \(=10000\times1.1^{3}=10000\times1.331=13310\)
Compound interest \(=13310-10000=3310\)
The compound interest is Rs 3310.