Question

Example 33: If Mr Kuber had lent $10 million
at an interest rate of 40% p.a. to a less preferred
customer Mr Narada, after how many years would
the principal double itself if compounded
half-yearly?​

Answer 1

Answer:

Step-by-step explanation:

The accumulation function for compound interest is :

Amount = P(1 + i)ⁿ

P = principle amount

i = interest rate

n = Time

Doing the substitution we have :

Amount = 50000 × (1.10) = 55000

here out n = 1

2) Half yearly

in this case :

n = 2 × the number of years

that is n = 2 for 1 year.

The interest is divided by two as follows :

10%/2 = 5%

doing the substitution :

Amount = 50000(1.05)² = 55125