Multiple choice

A certain amount becomes Rs.7803 at the end of a year at 4% rate of interest compounding semi – annually. The amount is

  1. Rs. 7000

  2. Rs. 7200

  3. Rs. 7500

  4. Rs. 7700
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Semi-annual compounding: 2 periods per year at 2% each. A(1.02)² = 7803. A = 7803/1.0404 = 7500. Check: 7500 × 1.02 = 7650, then × 1.02 = 7803 ✓.

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