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      Question

      A sum of Rs. 2000 was invested at a rate of 10%

      interest. The compound interest was calculated at an interval of every six months. What will be the net amount after the end of one year?
      A Rs. 2200 Correct Answer Incorrect Answer
      B Rs. 2220 Correct Answer Incorrect Answer
      C Rs. 2210 Correct Answer Incorrect Answer
      D Rs. 2205 Correct Answer Incorrect Answer

      Solution

      Given: • Principal (P) = Rs. 2000 • Rate of interest (R) = 10% per annum Since the interest is compounded half-yearly, the rate for half-year = 5% The formula for compound interest is:   • Where: • A is the amount after time t • P is the principal • R is the rate of interest • t is the time in years For this case: • P=2000 • R=5%(since the rate is calculated every 6 months) • t=2(since it is calculated for one year with two intervals of 6 months)

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