A sum of ₹1200 is invested at compound interest (compounded half yearly). If the rate of interest is 10% per annum, then what will be the amount after 18 months?
Answer & explanation
Correct answer: option 1
For 1/3rd year ,
Rate of interest = \(\frac{10}{2}\)% = 5%
18 months = 3 half year
From the formula for compound interest, we know,
C.I = P(1+$\frac{R}{100})^t$– P
= 1200 [ 1 + \(\frac{5}{100}\) ]³ - 1200
= 1200 [ \(\frac{21}{20}\) × \(\frac{21}{20}\) × \(\frac{21}{20}\) - 1 ]
= 1200[ \(\frac{ 9261 }{8000}\) - 1 ]
= 1200 [ \(\frac{1261}{8000}\) ]
= 189.15
So, Amount after 18 months = 1200 + 189.15
= Rs. 1389.15