Question

6. Geeta borrowed. * 15.000 for 18 months at a

certain rate of interest compounded semi-
annually. If at the end of six months it
amounted to 15.600; calculate :
(i) the rate of interest per annum.
(ii) the total amount of money that Geeta
must pay at the end of 18 months in
order to clear the account.​

Answer 1

i) 8%

ii) 16,872.96

Explanation:

A) Since she borrowed 15000 and at the end of six months it amounted to 15600. What it means is that;

Interest; i = 15600 - 15000 = 600

Now,formula for rate of interest is;

R = (100i)/(Pt)

Where;

i = 600

P is amount borrowed = 15000

t is time period compounded. Since it's compounded semi annually, then t = ½

Thus, from PRT/100 = i, we can find R as;

R = (100 × 600)/(15000 × (6/12))%

R = 8%

B) After 12 months, which is another semi annual period after 6 months, the Interest will now be;

15600 × 8% × (6/12) = 624

Thus, amount due at this point is 15600 + 624 = 16224

After 18 months which is another semi annual period after 12 months, the Interest will now be;

16224 × 8% × (6/12) = 648.96

Thus, amount due at this point is 16224 + 648.96 = 16,872.96