Find the compound interest on ₹1,60,000 at 10% per annum for 2 years if the interest is compounded half-yearly.

₹34,481

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