Multiple choice

A bank pays 5% rate of interest semi-annually, interest being calculated half yearly. A sum of Rs. 400 is deposited in the bank. The amount at the end of 1 year will be

  1. Rs. 440

  2. Rs. 439

  3. Rs. 441.00

  4. Rs. 442
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Principal = 400, rate = 5% half-yearly, time = 2 periods. Amount = 400 * (1 + 0.05)^2 = 400 * 1.1025 = 441.

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