Multiple choice

Rs. 10,000 is being compounded at 20% per annum. Calculate the amount after 2 years if the rate of interest is charged half yearly.

  1. 14600

  2. 12500

  3. 14642

  4. 14641

  5. NA
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

For 2 years compounded half-yearly at 20% p.a., the rate becomes 10% per half-year and the number of periods is 4. Amount = 10000 * (1 + 0.1)^4 = 10000 * 1.4641 = 14641.

AI explanation

For half-yearly compounding, the amount is calculated using the formula Amount = Principal multiplied by (1 plus Rate by 200) raised to the power of (2 multiplied by Time). Here the rate becomes 10 percent and the time becomes 4 periods, so Amount = 10000 multiplied by (1 plus 0.10) raised to the 4th power. This gives 10000 multiplied by 1.4641, which equals Rs. 14641.

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