What amount is to be repaid on a loan of rupees 12000 for 1 and half year at 10% per annum if interest is compounded half yearly?

Solution:

What is known: Principal, Time Period, and Rate of Interest

What is unknown: Amount and Compound Interest (C.I.)

Reasoning:

A = P[1 + (r/100)]n

P = ₹ 10,000

n = \(1{\Large\frac{1}{2}}\) years

R = 10% p.a. compounded annually and half-yearly

where , A = Amount, P = Principal, n = Time period and R = Rate percent

For calculation of C.I. compounded half-yearly, we will take the Interest rate as 5% and n = 3

A = P[1 + (r/100)]n

A = 10000[1 + (5/100)]3

A = 10000[1 + (1/20)]3

A = 10000 × (21/20)3

A = 10000 × (21/20) × (21/20) × (21/20)

A = 10000 × (9261/8000)

A = 5 × (9261/4)

A = 11576.25

Interest earned at 10% p.a. compounded half-yearly = A - P

= ₹ 11576.25 - ₹ 10000 = ₹ 1576.25

Now, let's find the interest when compounded annually at the same rate of interest.

Hence, for 1 year R = 10% and n = 1

A = P[1 + (r/100)]n

A = 10000[1 + (10/100)]1

A = 10000[1 + (1/10)]

A = 10000 × (11/10)

A = 11000

Now, for the remaining 1/2 year P = 11000, R = 5%

A = P[1 + (r/100)]n

A = 11000[1 + (5/100)]

A = 11000[(105/100)]

A = 11000 × 1.05

A = 11550

Thus, amount at the end of \(1{\Large\frac{1}{2}}\)when compounded annually = ₹ 11550

Thus, compound interest = ₹ 11550 - ₹ 10000 = ₹ 1550

Therefore, the interest will be less when compounded annually at the same rate.

☛ Check: NCERT Solutions for Class 8 Maths Chapter 8

Video Solution:

Find the amount and the compound interest on ₹ 10,000 for \(1{\Large\frac{1}{2}}\) years at 10% per annum, compounded half yearly. Would this interest be more than the interest he would get if it was compounded annually?

NCERT Solutions Class 8 Maths Chapter 8 Exercise 8.3 Question 8

Summary:

The amount and the compound interest on ₹ 10,000 for \(1{\Large\frac{1}{2}}\) years at 10% per annum, compounded half-yearly is  ₹ 11576.25 and  ₹ 1576.25 respectively. The interest will be less when compounded annually at the same rate.

☛ Related Questions:

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100 Questions 100 Marks 60 Mins

Given:

The sum = Rs 12,000

Time = \(1 \frac{1}{2}\) years

Rate = 10% p.a.

Formula used:

A = P(1 + R/100)t

Here, A, P, R and t are the Amount, Principal, Rate and time respectively

Concept used:

When compounded half-yearly then,

Rate is half and time is doubled

Calculation:

Rate = 10%/2 = 5% and Time = \(1 \frac{1}{2}\) × 2 = 3 half yearly

Now, A = P(1 + R/100)t

⇒ A = 12000(1 + 5/100)3

⇒ A = 12000 × 21/20 × 21/20 × 21/20

⇒ A = 13891.5

∴ The total amounts to be paid is Rs 13891.50

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Last updated at Nov. 12, 2018 by Teachoo

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