Multiple choice

What will be the compound interest on Rs. 1000 at 10% per annum for 1 year, when the interest is compounded half-yearly?

  1. Rs. 100

  2. Rs. 110

  3. Rs. 105

  4. Rs. 102.50

  5. Rs. 112.50
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Compounded half-yearly means 2 periods at 5% rate. Amount = 1000 * (1 + 0.05)^2 = 1000 * 1.1025 = 1102.50. Interest = 1102.50 - 1000 = 102.50.

AI explanation

For half-yearly compounding, the formula is Amount = Principal times (1 + (R/2)/100) raised to the number of half-year periods. Substituting the values gives an amount of 1000 times (1 + 5/100) squared, which equals 1000 times 1.1025 or Rs. 1102.50. Subtracting the principal of Rs. 1000 from this amount yields a compound interest of Rs. 102.50.

Keep practicing — related questions