Find the amount and the compound interest on Rs 10,000 for years at 10% per annum, compounded half yearly. Would this interest be more than the interest he would get if it was compounded annually?

Question

Philoid · Accepted Answer

Here, Principal (P) = Rs. 10000, Rate of Interest (R) = 10% = 5% (compounded half yearly)

Time, n = years = 3 years (compounded half yearly)

= Rs. 11,576.25

Compound Interest (C.I.) = A – P

= Rs. 11,576.25 – Rs. 10,000 = Rs. 1,576.25

If it is compounded annually, then

Here, Principal (P) = Rs. 10000, Rate of Interest (R) = 10%, Time = years

Amount (A) for 1 year =

= Rs. 11,000

Interest for 1/2 year = = Rs. 550

∴ Total amount = Rs. 11,000 + Rs. 550

= Rs. 11,550

Now, C.I. = A – P = Rs. 11,550 – Rs. 10,000

= Rs. 1,550

Yes, interest Rs. 1,576.25 is more than Rs. 1,550.