Find the compound interest on ₹40,000 after 2 years 6 months at 20% per annum, if the interest is compounded half-yearly.
Show answer & explanation
Correct answer: C
Explanation
The correct answer is option 3 i.e. ₹24,420.40
Given:
P = 40000
Rate = 20%
Time = 2.5 years
Formula used:
CI = P(1 + R/100)T - P ----- (1)
Where, CI = Compound interest, P = principal, R = rate and T = time
Calculations:
When interest is compounded half yearly
New rate = R/2 and New time = 2T
⇒ New rate = 20/2 = 10% and New time = 2.5 × 2 = 5%
Using equation (1), we get
⇒ CI = 40000(1 + 10/100)5 - 40000
⇒ CI = 64420.4 - 40000 = 24420.40