Question

My father deposited rs62500 in a bank for 1 year the bank will give an interest @8%p.a compounded half yearly.
1. Find the compounded interest earned by my father.
2. If the same money Is deposited in the bank for 1 year @ 8% p.a simple interest. Find the difference between simple and compunded interest

Answer 1

Given:

P = Rs. 62,500

R = 8% pa = 2% per quarter

n = 12 months = 4 quarters

Formula Used:

Amount = P(1 + R/100)n

Calculation:

∴ According to the formula:

⇒ P(1 + R/100)n

⇒ 62,500(1 + 2/100)4

⇒ 62,500(51/50)4

⇒ Rs. 2,55,000