Question

Divakaran deposited a sum of Rs. 6250 in the Allahabad Bank for 1 year, compounded half-yearly at 8% per annum. Find the compound interest he gets.

Answer 1

Present value = Rs.6250 

Interest rate = 8 % per annum 

Time = 1 years 

∵ Interest is compounded half-yearly. 

∴ Amount (A) = P [1 + (R/2)/100]²ⁿ [Where, P = Present value 

R = Annual interest rate 

n = Time in years] 

∴ A = 6250 [1 + (8/2)/100]² 

⇒ A = 6250 [1 + 4/100]² 

⇒ A = 6250 [26/25]² 

⇒ A = 6250 × 26/25 × 26/25 

⇒ A = 10 × 26 × 26 

⇒ A = 6760 

∴ Amount = Rs.6760 

∴ Compound interest = Rs.(6760 – 6250) 

= Rs.510 

∴ Divakaran gets a CI of Rs.510.