Find the interest and amount if ₹ 2,000 is invested for 2 years at 4% p.a. compounded half yearly.
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Answer:
Compound Interest
If the borrower and the lender agree to fix up an interval of time (say, a year or a half year or a quarter of a year etc) so that the amount (Principal + interest) at the end of an interval becomes the principal for the next interval, then the total interest over all the intervals, calculated in this way is called the compound interest and is abbreviated as C.I.
Compound interest at the end of a certain specified period is equal to the difference between the amount at the end of the period and original principal i.e. C.I. = Amount – Principal. In this section, we shall discuss some examples to explain the meaning and the computation of compound interest. Compound interest when interest is compounded annually.
Compound Interest