Amit charges interest on his lending at 20% Compound

Solution

ATQ, Let P be the principal amount lent by Amit. After 2 years, the amount obtained at the end of the period will be: A = P x (1 + r/100) ⁿ where r is the annual interest rate (20%), n is the number of compounding periods in 2 years (4, since compounding is done half-yearly), and A is the amount obtained. So, we have: A = P x (1 + 20/100)⁴ A = 1.6384P Now, let's find the amount of interest earned: I = A - P I = 1.6384P - P I = 0.6384P So, the principal is 63.84% less than the amount obtained at the end of 2 years.