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      Question

      Calculate the amount of interest earned on an investment

      of Rs. 62,500 at an annual compound interest rate of 32%, compounded half-yearly, for a period of 12 months.
      A Rs. 19600 Correct Answer Incorrect Answer
      B Rs. 16800 Correct Answer Incorrect Answer
      C Rs. 21600 Correct Answer Incorrect Answer
      D Rs. 22400 Correct Answer Incorrect Answer
      E None of these Correct Answer Incorrect Answer

      Solution

      Effective time = (12/6) = 2 terms Effective rate = (32/2) = 16% CI = P X (1 + R/100)t - P Or, compound interest = 62,500 X (1.16)2 - 62,500 Or, compound interest = 84100 - 62,500 = Rs. 21600

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