What sum invested for 1 ½ years compounded.

What sum invested for 1 ½ years compounded half yearly at the rate of 4% p.a. will amount to ₹132651?

Solution:

It is given that
Amount (A) = ₹ 132651
Rate of interest (r) = 4% p.a. or 2% half yearly
Period (n) = 1 ½ years or 3 half years
We know that
A = P (1 + r/100)n
It can be written as
P = A ÷ (1 + r/100)n
Substituting the values
= 132651 ÷ (1 + 2/100)3
By further calculation
= 132651 ÷ (51/50)3
So we get
= 132651 × (50/51)3
= 132651 × 50/51 × 50/51 × 50/51
= ₹ 125000
Hence, the principal amount is ₹ 125000.

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