Question

What is the compound interest on 5000rs at the rate of 12% per annum compounded half yearly for 1 and half year?

Answer 1

Answer:     compound interest = rs 955.08

Explanation:  compound interest = P{(1+i)^n- 1}

Where , P = Principal amount

i = rate , i.e ; r/100

here r = 12% = 0.12 , i.e ; i

n = time

here n = time duration for compounding the value

A/Q = the compounding duration was of 1 and a half year compounded half yearly ; so , there are 3 half yearly in 1 and half years, when compounded half yearly .

The rate i.e ; i here will be divided by 2 as there are 2 half yearly in a year .

C.I = P { (1 + i )^n -1 }

      = 5000 { (1 + .12/2)^3 -1 }

      = 5000 { ( 1.06 )^3 -1 }

      = 5000 { 1.191016 - 1 }

      = 5000 * 0.191016

      = 955.08