A sum of money was invested at 10% interest per year, compounded half-yearly for 18 months. If the amount payable on maturity was ₹83,349, what was the sum invested?
Answer & explanation
Correct answer: option 4
Interest is compounded half yearly,
Rate of interest = \(\frac{10}{2}\)% = 5%
From the formula for compound interest, we know,
Amount = P(1+$\frac{R}{100})^t$
83349 = P [ 1 + \(\frac{5}{100}\) ]³
83349 = P [ \(\frac{21}{20}\) × \(\frac{21}{20}\) × \(\frac{21}{20}\) ]
83349 × \(\frac{20}{21}\) × \(\frac{20}{21}\) × \(\frac{20}{21}\) = P
P = 72000