Question
Mitch placed Rs. 32,000 in a compound interest account
with an annual rate of 30%, compounded semi-annually. After investing for a period of 15 months, calculate the total amount Mitch will receive by the end of this term.Solution
Compound interest = Sum X {1 + (rate of interest/100) }time period - Sum Effective rate of interest = 30 ÷ 2 = 15% per term So, amount after 1 year = 32,000 X (1.15) 2 = Rs. 42,320 And interest charged in next 3 months = 42,320 X 15 X 3 ÷ (12 X 100) = Rs. 1,587 So, amount after 15 months = 42,320 + 1587 = Rs. 43,907
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