Question

If the interest is compounded half-yearly, calculate the amount when principal is Rs. 7,400; the rate of interest is 5% per annum and the duration is one year.

Answer 1

Given: P = Rs. 7,400; r = 5% p.a. and n = 1 year

Since the interest is compounded half-yearly,

Then, A = `"P"( 1 + r/[ 2 xx 100] )^(n xx 2)` 

= `7,400( 1 + 5/[ 2 xx 100] )^(1 xx 2)`

= `7,400( 41/40)^2`

= Rs. 7,774.63