Multiple choice

If A = Rs. 1000, n = 2 years, R = 6% p.a compound interest payable half-yearly then principal (P) is

  1. Rs. 888.80

  2. Rs. 880

  3. Rs. 800

  4. None of these
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A Correct answer
AI explanation

For half-yearly compound interest, the formula becomes A = P(1 + R/(2*100))^(2n). Substituting the given values gives 1000 = P(1 + 6/200)^4, which simplifies to 1000 = P(1.03)^4. Evaluating 1.03^4 gives approximately 1.12550881, so P = 1000 / 1.12550881, which calculates to a principal of Rs. 888.80.

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