Rs. 6000 is lent at the rate of 20 percent per annum on compound interest (compounded half yearly). What will be the compound interest of 18 months?
Answer & explanation
Correct answer: option 2
Rate of compound interest compounded half yearly = \(\frac{20 }{2}\)% = 10%
For 18 months ( Compounded half yearly) , n = 3
Amount = Principal × ( 1 + \(\frac{rate }{100}\) )n
= 6000 × ( 1 + \(\frac{10 }{100}\) )3
= 6000 × \(\frac{11 }{10}\) × \(\frac{11 }{10}\) × \(\frac{11 }{10}\)
= Rs. 7986
We know ,
Amount = Principal + Interest
7986 = 6000 + Interest
Interest = 7986 - 6000 = 1986