Question

Sangeeta invested rs.20,000 at 8% per annum. if the interest is compounded half yearly, then total interest earned by sangeeta at the end of the year is

Answer 1

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Answer 2

Sangeeta’s total interest earned in  year end is Rs. 1632

Solution:

Given:

Principal amount invested by Sangeeta  =  Rs.20000 per year

Rate of interest per year = 8%

Interest compounded half early at interest rate 8% = $\frac{r}{2}$

Formula to find compound interest = $\mathrm{p}\left[1+\frac{\left(\frac{r}{2}\right)}{100}\right]^{2 \mathrm{n}}$

r = Rate of Interest, p = Money invested, n = Time of Investment.

Compound Interest = $20000\left[1+\frac{\left(\frac{9}{2}\right)}{100}\right]^{2}$

$20000\left[1+\frac{4}{100}\right]^{2}=20000\left[\frac{104}{100} \times \frac{104}{100}\right]$=R s .21632

Total Interest earned = Compound Interest – Total amount = 21632 – 20000 = 1632