Question

Compute the compound interest on ₹ 20,000: a. For 2 years at 4% per annum compounded half yearly. b. For1 year at 4% per annum compound and quartely.​

Answer 1

Solution-

a. P = ₹20,000

R = 4% per annum = (4/2)% half - yearly = 2% half yearly,

n = 2 years = (2 × 2) half - yearly = 4 half - yearly

Amount, A = P(1+R/100)ⁿ

--»A = 20,000 (1+2/100)⁴

= A = 20,000 (51/50)⁴

= A = 20000×51×51×51×51/50×50×50×50

= ₹21,648.64

Thus, compound interest

= ₹ (21648.64-20000)

= ₹ 1648.64

b. P = ₹20,000

R = 4% Per annum = (4/4)% quarterly = 1% quarterly,

n = 1 year = (1×4) quarter years = 4 quarter years

Amount, A = P (1+R/100)ⁿ

A = 20,000 (1+1/100)⁴

A = 20,000 (101/100)⁴

A =

20000×101×101×101×101/100×100×100×100

= ₹ 20,812.08

Thus compound interest

= ₹(20812.08 - 20,000)

= ₹812.08