Find the compound amount and compound interest on the principal ®20000borrowed at 6%compounded annually for 3years
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Answer:
We are given P = Rs. 20,000, R = 6% and n = 1
2
1
years. Here the interest is to be calculated semi annually. Hence 2n = 3. We have the formula to calculate the amount semi annually. Using this formula, we can find the amount directly;
A=P(1+
2×100
R
)
2n
=20000(1+
2×100
6
)
3
=20000(1+
100
3
)
3
=20,000(1.3)
3
≈21,854.54
Here ≈ denotes approximate value. Finally compound interest is given by
C.I.=A−P=Rs.21,854.54−Rs.20,000=Rs.1,854.54≈Rs.1,855
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