Question
A sum of Rs. 20000 earns compound interest at 9% per annum,
compounded half yearly. Find the total interest at the end of one year.Solution
ATQ,
Effective rate of interest = 9 × (6/12) = 4.5%
Effective time or number of terms = 2 half years
Or, amount received = 20000 × {1 + (4.5/100)}² = 20000 × (104.5/100) × (104.5/100) = Rs. 21844.50
Therefore, interest received = 21844.50 - 20000 = Rs. 1844.50
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