Question

Niti owes 12500 without interest 3 years from today. What sum would the creditor be
willing to accept today if he can invest the money at 4% compounded semi-annually?
​

Answer 1

Answer:

Principle =Rs.12500, Time period =9 months

1 quarter =3 months

3 quarter =9 months

Time period =3 quarters

Rate of Interest =8% per annum

1 annum =4 quarters

Rate of Interest =2% per quarter

Amount = Principle ×[1+

100

Rate of Interest

]

Time period

=12500×[1+

100

2

]

3

=12500×(1.09)

3

Amount=Rs.13265

Compound Interest=Amount − Principle

=Rs.13265−Rs.12500

Compound Interest=Rs.765