Multiple choice

What amount is to be repaid on a loan of RS. 12000 for $1\frac{1}{2}$ year at 10% per annum if interest is compounded half yearly.

  1. $13500$
  2. $9734.75$
  3. $13891.5$
  4. $5837.25$
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Half-yearly compounding gives a rate of 5% for each half-year. Over 1.5 years there are three half-years, so the amount is 12000 × 1.05^3 = Rs. 13891.50.

AI explanation

When interest is compounded half-yearly for one and a half years, we use the formula A = P(1 + R/200)^2n, which gives us three calculation periods at a 5% half-yearly rate. The amount is calculated as 12000 multiplied by (1 + 10/200) cubed. This simplifies to 12000 multiplied by 1.157625, giving a final repayment amount of Rs. 13891.5.

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