Question

if the amount is rupees 400 and principal is rupees 100 which is compounded half yearly for 1 year , Calculate rate of interest

a) 10
b) 2
c) 200
d) 20​

Answer 1

Answer:

The correct option is (b) 2.

Step-by-step explanation:

As the interest you earn on your savings starts to earn interest on itself, it is what is known as compound interest. When interest increases, it starts to accumulate more quickly and climbs exponentially. The impact on your savings might be significant.

We can use the formula for compound interest:

A = P(1 + r/n)^(nt)

where:

A = final amount (Rs. 400)

P = principal (Rs. 100)

r = annual interest rate (what we need to find)

n = number of times compounded per year (2 since it's compounded half-yearly)

t = time in years (1)

Substituting the given values, we get:

400 = 100(1 + r/2)^(2*1)

Simplifying:

4 = (1 + r/2)^2

Taking the square root of both sides:

2 = 1 + r/2

r/2 = 1

r = 2*1 = 2

Therefore, the rate of interest is 2%.

Hence, the correct option is (b) 2.

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