Multiple choice

A fixed deposit account offers an annual compound interest rate of 6%, compounded semi-annually. If Ramesh deposits Rs. 5,000 on January 1st and another Rs. 5,000 on July 1st of the same year, how much total interest will he earn by December 31st?

  1. Rs. 435.25

  2. Rs. 442.35

  3. Rs. 454.50

  4. Rs. 465.55

  5. Rs. 478.50
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The first 5000 earns interest for two 6-month periods at 3% per period: 5000 * (1.03)^2 - 5000 = 304.50. The second 5000 earns interest for one 6-month period: 5000 * 0.03 = 150. Total interest = 304.50 + 150 = 454.50.

AI explanation

The annual rate of 6% gives a semiannual rate of 3% (0.03). The January deposit earns interest for two periods, growing to 5000 multiplied by 1.03 squared, which is 5304.50 for an interest of 304.50. The July deposit earns interest for one period, growing to 5000 multiplied by 1.03, which is 5150 for an interest of 150. Adding the interest from both deposits gives a total of 304.50 plus 150, which is Rs. 454.50.

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