A bank offers compound interest at 10% annually when interest is compounded half-yearly. A customer deposits Rs.3,200 each on 1st January and 1st July. At the end of the year, what will be the amount received by the customer as interest?
Show answer & explanation
Correct answer: A
Explanation
The correct answer is Option 1 i.e. Rs.488.
We know that, C.I. = P(1+ R/100)T - P
where, C.I. = compound interest, A = Amount, P = Principal, T = time and, R = rate
Amount received at the end of the year
A = 3200(1 + 5/100)2 + 3200(1 + 5/100)1
A = 3200 × 1.052 + 3200 × 1.05
A = 3528 + 3360
A = Rs.6888
Principal amount = Rs.(3200 + 3200) = Rs.6400
Total interest earned = Rs.(6888 - 6400) = Rs.488