Multiple choice

Find the compound interest earned on Rs 1250 over a period of 1.5 years at an interest rate of 5 percent per annum, assuming the interest is payable semi-annually.

  1. 96.11 rs

  2. 91.24 rs

  3. 95.31 rs

  4. 100.01 rs

  5. 120.22 rs
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AI explanation

Because the interest is payable semi-annually, the new rate is 5 divided by 2, which equals 2.5 percent, and the new time is 1.5 times 2, which equals 3 half-yearly periods. Using the compound interest formula, the final amount is 1,250 times the quantity 1 plus 2.5 divided by 100 quantity cubed, which is 1,250 times 1.025 cubed, giving approximately 1,346.11. Subtracting the original principal of 1,250 from this final amount gives a compound interest of 96.11.

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