Question

Interest is compounded half-yearly, calculate the amount and the
compound interest when the principal is 3750, the rate of interest is 8% and
the duration is one year.
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Answer 1

Answer:

300

Step-by-step explanation:

SI=PTR/100

3750×1×8/100=300

• therefore answer is 300

Answer 2

Answer:

Amount = 4056; Compound interest = 306

Step-by-step explanation:

P = initial amount = 3750

R = rate of interest per cent per year = 8

T = time period in years = 1

m = compounding interval = 2             ...[No. of time intervals in a year]

A = amount at the end of period T

According to Compound Interest formula:

A = P*[1 + (R/m)/100]^Tm

R/m = 4 and Tm = 2

=> A = 3750*(1 + 4/100)^2

        = 3750*(1.04)^2

        = 3750*1.0816

        = 4056

Compound Intererst (CI) = A - P

=> CI = 4056 - 3750

=> CI = 306