What sum invested at 4% per annum compounded semi-annually amounts to ₹ 7803 at the end of one year?
Solution:
It is given that
Amount (A) = ₹ 7803
Rate of interest (r) = 4% p.a. or 2% semi-annually
Period (n) = 1 year or 2 half years
We know that
A = P (1 + r/100)n
Substituting the values
= 7803 + (1 + 2/100)2
By further calculation
= 7803 + (51/20)2
= 7803 × 50/51 × 50/51
= ₹ 7500
Hence, the principal is ₹ 7500.
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