Multiple choice

Ravi invested Rs. 15000 at the rate of interest 10% p.a. for one year. If the compound interest is compounded every six months, what amount will Ravi get at the end of the year?

  1. Rs. 16537.50

  2. Rs. 16500

  3. Rs. 16525.50

  4. Rs. 18150
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A Correct answer
Explanation

Principal = Rs. 15000, Rate = 10% p.a., compounded half-yearly means rate per period = 5% and there are 2 periods. After first 6 months: Amount = 15000 × (1 + 5/100) = 15000 × 1.05 = Rs. 15750. After second 6 months: Amount = 15750 × 1.05 = Rs. 16537.50. Using formula: A = P(1 + r/200)^(2n) = 15000(1 + 10/200)² = 15000(1.05)² = 15000 × 1.1025 = 16537.50.

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