Question

A sum of ₹12,500 is deposited for 1½ years, compounded half yearly. It amounts to ₹13,000/- at the end of first half year. Find :
(i) The rate of interest
(ii) The final amount. Give your answer correct to the nearest rupee.

Answer 1

Rate of interest = 8%

Amount at the end of 1.5 years = Rs. 14061

Explanation:

P= Rs. 12500

(i) A = P (1 + r/n)^nt

13000 = 12500 ( 1 + r/2) ^1

26 = 25 (1 + r/2)

1.04 = 1 + r/2

r = 0.08 = 8%

Rate of interest = 8%

(ii) t = 3/2 years, r = 8%

A = 12500 ( 1 + 8/200)^(2*3/2)

=  12500 (1 + 8/200)^3

= 14060.8

Amount at the end of 1.5 years = Rs. 14061