Compound interest reckoned semi-annually.

Find the amount and the compound interest on ₹ 5000 at 10% p.a. for 1 ½ years, compound interest reckoned semi-annually.

Solution:

It is given that
Principal (P) = ₹ 5000
Rate of interest = 10% p.a. or 5% half-yearly
Period (n) = 1 ½ years or 3 half-years
We know that
A = P (1 + r/100)n
Substituting the values
= 5000 (1 + 5/100)3
By further calculation
= 5000 × 21/20 × 21/20 × 21/20
= ₹ 5788.12
Here
CI = A – P
Substituting the values
= 5788.12 – 5000
= ₹ 788.12

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