Find the compound interest on ₹40,000 after 2 years 6 months at 20% per annum, if the interest is compounded half-yearly.
Answer & explanation
Correct answer: option 3
Interest is compounded half yearly ,
Rate of interest = \(\frac{20}{2}\)% = 10%
From the formula for compound interest, we know,
C.I = P(1+$\frac{R}{100})^t$– P
= 40000 [ 1 + \(\frac{10}{100}\) ]5 - 40000
= 40000 [ \(\frac{11}{10}\) ]5 - 40000
= 40000 [ \(\frac{161051}{100000}\) - 1 ]
= 40000 [ \(\frac{ 61051 }{100000}\) ]
= Rs. 24420.4