Find the compound interest on ₹1,60,000 at 10% per annum for 2 years if the interest is compounded half-yearly.
Answer & explanation
Correct answer: option 2
Interest is compounded half - yearly,
Actual rate of interest = \(\frac{10}{2}\)% = 5%
From the formula for compound interest, we know,
C.I = P(1+$\frac{R}{100})^t$– P
= 160000 [ 1 + \(\frac{5}{100}\) ] - 160000
= 160000 [ \(\frac{21}{20}\) × \(\frac{21}{20}\) × \(\frac{21}{20}\) × \(\frac{21}{20}\) - 1 ]
= 160000 [ \(\frac{ 194481 }{160000}\) - 1 ]
= 160000 [ \(\frac{34481}{160000}\) ]
= Rs. 34481