150k views
2 votes
Find the compounded interest on Rs. 5000 for 2(1/2) year 5% per annum, compounded half-yearly

User Aardbol
by
7.7k points

1 Answer

6 votes

To calculate the compounded interest on Rs. 5000 for 2(1/2) years at an annual interest rate of 5%, compounded half-yearly, we can follow these steps:

1. First, let's determine the number of compounding periods in 2(1/2) years. Since interest is compounded half-yearly, there will be 2 compounding periods per year. Therefore, in 2(1/2) years, there will be a total of 5 compounding periods (2 x 2 + 1 = 5).

2. Next, we need to calculate the interest for each compounding period. The formula to calculate compound interest is given by: A = P(1 + r/n)^(nt), where A is the final amount, P is the principal amount, r is the annual interest rate, n is the number of compounding periods per year, and t is the total number of years.

3. In this case, the principal amount (P) is Rs. 5000, the annual interest rate (r) is 5% (or 0.05 as a decimal), the number of compounding periods per year (n) is 2, and the total number of years (t) is 2(1/2) = 2.5 years.

4. Plugging these values into the compound interest formula, we get:

A = 5000(1 + 0.05/2)^(2 x 2.5)

A = 5000(1.025)^(5)

A ≈ 5000(1.1314084)

5. Calculating the final amount, we have:

A ≈ 5657.04

6. Finally, to find the compounded interest, we subtract the principal amount from the final amount:

Compounded Interest = A - P

Compounded Interest = 5657.04 - 5000

Compounded Interest ≈ 657.04

Therefore, the compounded interest on Rs. 5000 for 2(1/2) years at an annual interest rate of 5%, compounded half-yearly, is approximately Rs. 657.04.

User Soumya Mahunt
by
8.5k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories