If Rs. 60,000 is invested at a compound interest of 20% p.a. for 18 months, then find the interest earned given that the sum is compounded every 6 months.
Show answer & explanation
Correct answer: D
Explanation
Given:
Principal = ₹60,000
Rate = 20% per annum
Time = 18 months
Compounding = half-yearly
By the formula:
A = P(1 + R/2 × 100)ⁿ
Where n = number of half-yearly periods
18 months = 1.5 years
Half-yearly period = n = 1.5 × 2 = 3
Half-yearly rate = 20% / 2 = 10%
A = 60,000(1 + 10/100)³
= 60,000(1.1)³ = 79,860
Interest earned = 79,860 − 60,000 = ₹19,860