Question
Calculate the compound interest earned on Rs. 18,000 when
it is invested at 10% per annum, compounded semi-annually for 1 year.Solution
ATQ,
Effective rate = 10/2 = 5%
Effective time = 2 terms, where each term is 6 months
So, total amount after 1 year = 18000 × {1 + (5/100)}² = 18000 × (1.05)² =
18000 × 1.1025 = Rs. 19,845
Compound interest after 1 year = 19845 – 18000 = Rs. 1,845
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