Rs. 6000 is lent at the rate of 20% per annum on compound interest (compounded half yearly). What will be the compound interest of 18 months?
Show answer & explanation
Correct answer: B
Explanation
The correct answer is option 2 i.e. Rs. 1986.
P = 6000
R = 20/2 = 10%
n = 3 (Compounding 3 times in 18 months)
CI = P[(1 + R/100)n - 1]
= 6000[(1 + 10/100)3 - 1]
= 6000[(11/10)3 - 1]
= 6000(1331/1000 - 1)
= 6000 × 331/1000
= 1986
Hence, the compound interest will be Rs. 1986.