Question

If rs 8000 amounts to rs 19808 in 8 years at compound interest what will the same amount become in half the time

Answer 1

Answer:

Final amount is Rs.12560, after 4 years of compounding the principal of Rs.8000 at 12% interest.

Explanation:

Formula required:

Let us assume the amount is compounded on yearly basis.

A = P (1 + r)^t

On rearranging,

r = (A/P)^(1/t) -1

Here,

A = Final Amount = Rs.19808

P is Principal = Rs.8000

t is number of years of deposit = 8 years

So, rate of interest (r) = (19808/8000/0 ^ (1/8) - 1

= 2.476 ^ 0.125 - 1

= 1.12 - 1

r = 0.12

Rate of interest = 12%

Now, if the same principal amount is invested for half the time (i.e) t = 4 years at r = 12%, then,

Final amount (A) = 8000 (1 + 0.12) ^ 4

= 8000 * 1.57

A = Rs. 12560

Answer 2

Answer:

After 4 years of compounding the principal of Rs 8000 at 12% interest is Rs 12,560. A is Rs 19,808, Principal is Rs, 8000, T is 8 years so rate of interest is 12%. Now, if the same principal amount is invested for half the time then the final amount will be Rs 12,650 which we have already mentioned in the introduction of this answer.