Sheela deposited Rs. 20000 in a bank, where the interest is credited half-yearly. If the rate of interest paid by the bank is 6% per annum, what amount will she get after 1 year?
Present value, P = Rs.20000
Interest rate, R = 6% per annum
Time, n = 1 years
∵ Compounded half-yearly.
∴ Amount (A) = P [1 + (R/2)/100]2n [Where, P = Present value
R = Annual interest rate
n = Time in years]
∴ A = 20000 [1 + (6/2)/100]2
⇒ A = 20000 [1 + 3/100]2
⇒ A = 20000 [103/100]2
⇒ A = 20000 × 103/100 × 103/100
⇒ A = 2 × 103 × 103
⇒ A = 21218
∴ Amount = Rs.21218
∴ Shella gets Rs.21218 after 1 year.