Question

Himachal Pradesh state electricity board issued in July 1988,20 year bonds worth RS 6.25 crore. the issue price of each bond is Rs 100 and carries an annual interest of 11.5%, compounded half-yearly. Jasbir invested RS 5000 in these bonds. find the amount that he get on maturity of the bonds in 2008

Answer 1

Given: Principal (P) = Rs. 5000, R = 11.5% p.a.

To find:  The amount that he get on maturity of the bonds in 2008

Solution:

• So we have given the principal value as Rs 5000 and rate is given as 11.5% per annum.

• Now for half year rate will be: 11.5%/2 = 5.75% for half year.

• So compounded for half yearly, we have:

          Time as 2008 - 1988 = 20 years

          This 2000 years = 40 half years as given in question.

• So the amount of bond on maturity is;

          A = P(1+ r/100)^n

             = P(1+r(0.01))^n

             = 5000( 1 + 5.75 x 0.01)^40

             = 5000(1.0575)^40

             = 5000(9.3586)

            = Rs 46793.45

Answer:

              So the amount that he get on maturity of the bonds in 2008 will be Rs 46793.45

Answer 2

Answer:

it is the correct answer