Multiple choice

Calculate compound interest of $ $2000$ for a period $1$ year, compounded semi-annually at the rate $0.2$% per six months.

  1. $5.008$
  2. $6.008$
  3. $7.008$
  4. $8.008$
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D Correct answer
Explanation

For 1 year compounded semi-annually at 0.2% per 6 months, there are 2 periods. Amount = 2000 * (1 + 0.002)^2 = 2000 * 1.004004 = 2008.008. Interest = 2008.008 - 2000 = 8.008.

AI explanation

Using the compound interest formula Amount = P x (1 + R/100)^n with a principal of 2000, a rate of 0.2 percent per half-year, and 2 compounding periods, the total amount becomes 2000 x (1 + 0.002)^2. This evaluates to 2000 x 1.004004, resulting in an amount of 2008.008. Subtracting the original principal of 2000 gives the compound interest of 8.008.

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