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    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.
    A Rs.1844.50 Correct Answer Incorrect Answer
    B Rs.2264 Correct Answer Incorrect Answer
    C Rs.1160.75 Correct Answer Incorrect Answer
    D Rs.3040 Correct Answer Incorrect Answer

    Solution

    ATQ,

    Effective rate of interest = 9 ├Ч (6/12) = 4.5%

    Effective time or number of terms = 2 half years

    Or, amount received = 20000 ├Ч {1 + (4.5/100)}┬▓ = 20000 ├Ч (104.5/100) ├Ч (104.5/100) = Rs. 21844.50

    Therefore, interest received = 21844.50 - 20000 = Rs. 1844.50

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