Question

What sum of money will amount to Rs. 27,783 in one and a half years at 10% per annum compounded half yearly?

Answer 1

Given:

Amount, A = ₹ 27,783

Rate, R = 10% per annum

Time, T = 1.5 years = `1 1/2 = 3/2` years

Compounded half-yearly

Convert data for half-yearly compounding

Rate per half-year = `10/2 = 5%`

Number of half-years = 1.5 × 2 = 3

Use compound interest formula

`A = P (1+r/100)^n`

27,783 = P `(1+5/100)^3`

27,783 = P(1.05)³

27,783 = P × 1.157625

`P = 27783/1.157625`

P = ₹ 24,000