Question

Find the amount on ₹ 7500 when interest is calculated half yearly for 1 year at 12% p.a.

Options

• ₹ 8400

• ₹ 8427

• ₹ 8600

• ₹ 8896

Answer 1

₹ 8427

Explanation:

Step 1: Understand half-yearly compounding

• Annual rate = 12% 
• Half-yearly rate = 12 ÷ 2 = 6% per half-year
• Number of periods = 2 (because 1 year has 2 half-years) 

Formula for compound interest:

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

Where:

• P = 7500
• r = 6% per half-year
• n = 2 half-years

Step 2: Substitute the values

`A = 7500(1 + 6/100)^2`

`A = 7500 xx (1.06)^2`

Step 3: Calculate (1.06)²

1.06 × 1.06 = 1.1236

A = 7500 × 1.1236

A ≈ 8427