Question 28:
A sum of ₹10,000 is invested for 2 years at 20% per annum interest, compounded half-yearly. What is the compound interest earned at the end of 2 years? (use (1.10)⁴ = 1.4641)
Options :
- a) ₹4,440
- b) ₹4,641
- c) ₹4,660
- d) ₹4,461
correct answer : b)
Explanation :
Half-yearly compounding rate r = 20% / 2 = 10% = 0.10.
Time periods n = 2 years × 2 = 4 half-years.
Amount A = P × (1 + r/100)⁴ = 10,000 × (1.10)⁴ = 10,000 × 1.4641 = ₹14,641.
Compound Interest = A – P = 14,641 – 10,000 = ₹4,641.