Mohan invested ₹5,000 in a bank which offered interest at the rate of 10% per year compounded semi-annually. How much amount will he get after 2 years? [Give your answer correct to the nearest integer value.]
Answer & explanation
Correct answer: option 4
Interest is compounded half - yearly,
Actual rate of interest = \(\frac{10}{2}\)% = 5%
From the formula for compound interest, we know,
Amount = P(1+$\frac{R}{100})^t$
= 5000 [ 1 + \(\frac{5}{100}\) ]4
= 5000 [ \(\frac{21}{20}\) × \(\frac{21}{20}\) × \(\frac{21}{20}\) × \(\frac{21}{20}\) ]
= 5000 [ \(\frac{ 194481}{160000}\) ]
= 6077.53
= 6078 ( nearest integer value )