A sum of Rs 18000 is invested for 16 months at 8% per annum compounded half-yearly. Find the percentage increase (approx.) in the sum of the investment.
Show answer & explanation
Correct answer: B
Explanation
The correct answer is Option 2 i.e. 11%.
Principal amount, P = 18000
Rate, R = 8%
Time, T = 16 month = 1 year 4 months = 1 + 4/12 = 4/3
Compounded half-yearly
So, the number of times compounded half-yearly = 2
Rate = 4%, time = 8/3
According to the question,
A = P(1 + R/100)(2T) = 18000(1 + 4/100)(8/3) = 19987.968
Percentage increase = [(19987.968 - 18000)/18000] × 100 = 11% (approx.)