Find the compound interest on
12500 for 3/2years at 8% per annum compounded
semi-annually.
Answers
Example 1
Find the compound interest on Rs 1000 for two years at 4% per annum.
Solution: Principal for the first year =Rs 1000
SI=P×R×T100SIfor1styear=1000×4×1100SIfor1styear=Rs40
Amount at the end of first year =Rs1000 + Rs 40 = Rs 1040. Principal for the second year = Rs1040
SIfor2ndyear=1040×4×1100
SIfor2ndyear=Rs41.60
Amount at the end of second year,
Amount=Rs1040+Rs41.60=Rs1081.60
Therefore,
Compoundinterest=Rs(1081.60–1000)=Rs81.60
Remark: The compound interest can also be computed by adding the interest for each year.
Compound Interest when Compounded Half Yearly
Example 2: Find the compound interest on Rs 8000 for 3/2 years at 10% per annum, interest is payable half-yearly.
Solution: Rate of interest = 10% per annum = 5% per half –year. Time = 3/2 years = 3 half-years
Original principal = Rs 8000.
Interestforthefirsthalfyear=8000×5×1100=420
. Amount at the end of the first half-year= Rs 8000 +Rs 400 =Rs8400
Principal for the second half-year =Rs 8400
Interestforthesecondhalf−year=8400×5×1100=420
Amount at the end of the second half year = Rs 8400 +Rs 420 = Rs 8820
Interestforthethirdhalfyear=8820×5×1100=Rs441
Amount at the end of third half year= Rs 8820+ Rs 441= Rs 9261. Therefore, compound interest= Rs 9261- Rs 8000= Rs 1261. Therefore,
compoundinterest=Rs9261−Rs8000=Rs1261