Question

CASE STUDY A person wants to invest ₹ 100000 in fixed deposit scheme for 2 years. His financial advisor explained to him two types of schemes first is yielding 10% p.a. compounded annually, second is yielding 10% p.a. compounded semi-annually. Answer the following questions (any 4 out of 5) i) Rate of interest in semi annual case will be​

Answer 1

Answer:

We know that total amount in the case of compund interest can be calculated as,

Total amount =P(1+100×nr)nt

Case 1:

Here  r=10,n=1,t=2

Substituting these values we get,

⇒TA=P(1+100×nr)nt

⇒TA=(1,00,000)(1+100×110)2

On simplifying we get,

⇒TA=1,21,000

Case 2:

Here  r=10,n=2,t=2

Substituting these values we get,

⇒TA=P(1+100×nr)nt

⇒TA=(1,00,000)(1+100×210)2×2

⇒TA=(1,00,000)(1+100×210)4

On simplifying we get,

⇒TA=1,21,550.625

The amount in Case 2 is greater. 

Therefore Scheme 2 is a better scheme.

Step-by-step explanation:

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