Swati borrowed 40960 from a bank to buy a piece of land if the bank charges 12 1.2 per annum compounded half yearly what amount will have to pay after 2 years also find the interest paid by her
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Answer:
The formula for compound interest, including principal sum, is:
A = P (1 + r/n)^ (nt)
Where:
A = the future value of the investment/loan, including interest
P = the principal investment amount (the initial deposit or loan amount)
r = the annual interest rate (decimal)
n = the number of times that interest is compounded per unit t
t = the time the money is invested or borrowed for
In our given problem,
P = Rs. 40960
r = 12.5% = 0.125
n = 2
t = 1.5 years
Therefore, the amount payable after the term of 1.5 years will be given by: A = P (1 + r/n)^ (nt)
A = 40960 (1 + 0.125/2) ^(2×1.5)
A = 40960 (1 + 0.0625)^ 3
= 40960 (1.0625) ^3
A = ₹ 49130
The interest payable is given by I = A - P
I = 49130 - 40960
I = ₹ 8170
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