Question

What will be the amount after 2 years, if a sum of Rs.2,200 is invested at 12% per annum compound interest, compounded half-yearly (correct to two decimal places)?
1. Rs.2,766.18
2. Rs.2,733.45
3. Rs.2,777.45
4. Rs.2,755.76

Answer 1

Correct Answer - Option 3 : Rs.2,777.45

Given:

Sum = 2200

Rate of interest = 12%

Number of years = 2 years compounded half yearly

Concept:

In compound interest half yearly means the rate of interest is get halved

Formula used:

Amount = P[(1 + {(R/2) × 1/100})²ⁿ]

Calculations:

Amount = 2200[(1 + {(12/2) × 1/100})^{2 × 2})

⇒ Amount = 2200 (1 + 6/100)⁴

⇒ Amount = 2200 × 106 × 106 × 106 × 106/(100 × 100 × 100 × 100)

⇒ Amount = 2777.449 ≈ 2777.45

∴ The amount after 2 years is Rs. 2777045