Multiple choice

Javed makes a fixed deposit of 100000 in a bank for one year. If the rate of interest is 6% per annum, compounded half-yearly, then find the maturity value

  1. 106090

  2. 105000

  3. 104060

  4. 104000
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A Correct answer
Explanation

Principal = 100000, Rate = 6% p.a. compounded half-yearly = 3% per half-year. Time = 1 year = 2 half-years. Amount = 100000 * (1 + 3/100)^2 = 100000 * (1.03)^2 = 100000 * 1.0609 = 106090.

AI explanation

For a rate of 6 percent per annum compounded half-yearly, the rate per period is 3 percent and there are two periods in one year. Using the compound interest formula, Amount equals 100000 times (1 plus 3 divided by 100) raised to the power of 2. This simplifies to 100000 times 1.03 times 1.03, resulting in a maturity value of 106090.

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