Find the amount (integral value only) if a sum of ₹6,500 is being borrowed at 10% interest per annum for 2 years if interest is compounded half-yearly.
Show answer & explanation
Correct answer: D
Explanation
The correct answer is option 4 i.e. ₹7,900.
Given that
A sum of ₹6,500 is being borrowed at 10% interest per annum for 2 years
For compounded half yearly
Rate = 10/2 = 5%
Time = 2 × 2 = 4 years
Formula used
Amount = Principal (1 + Rate/100)time
Calculation
Amount = 6500 (1 + 5/100)4
Amount = 6500 × (21/20)4
Amount = ₹7900