Question

Neeraj lent Rs.65,536 for 2 years at 12 1/2 % per annum compounded annually.

How much more could he earn if the interest were compounded half-yearly?



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Answer 1

Answer:

If the interest were compounded half-yearly, he could earn more interest = Rs 577

Step-by-step explanation:

Given,

Principal ( P ) = Rs 65536

Rate ( R ) = $12\frac{1}{2}$ % per annum

               = $\frac{25}{2}$ % per annum

               = $\frac{25}{4}$ % half yearly

Time ( T ) = 2 years

               = 4 half years

We know that:

        Amount ( A ) = $P(1+\frac{R}{100})^n$

                             = $65536(1+\frac{25}{4*100} )^4$

                             = $65536* (\frac{17}{16})^4$

                             = Rs 83521

When Interest is compound Annually

         Amount ( A ) = $P(1+\frac{R}{100})^n$

                               = $65536(1+\frac{25}{2*100} )^2$

                               = $65536* (\frac{9}{8})^2$

                              = Rs 82944

Now,

More Interest Received = Rs 83521 - Rs 82944

                                       = Rs 577

Therefore,

If the interest were compounded half-yearly, he could earn more interest = Rs 577