Question
What is the interest earned when Rs. 6250 is invested
for 18 months in a scheme which offers compound interest (compounded every 9 months) of 16% p.a.Solution
Time period = 18 ÷ 9 = 2 terms of 9 months each Effective rate of interest = 16 × (9/12) = 12% So, interest earned = 6250(1 + 12/100)² – 6250
= 6250 × (112/100)² – 6250
= 6250 × 1.2544 – 6250
= 7840 – 6250 = Rs. 1590
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