Question

9) Mr.Rao bought 1-year, Rs.10000 certificate of deposit that paid interest at an annual rate of 8%

compounded semi-annually. The interest received by him on maturity is​

Answer 1

Rs 816

Explanation:

For the above question, the formula to use is given as:

Amount = P( 1 + r/n)^nt

Given, P = 10,000

r = 8% = 0.08

n = 2 = semi annually

t = 1 year

Amount = 10,000( 1 + 0.08/2)^2×1

Amount = 10,000( 1 + 0.04)²

= 10,000(1.04)²

= 10,000(1.0816)

= 10,816

Hence, Interest is calculated as

Amount - Principal

interest = Rs. 10,816 − Rs. 10000

= Rs. 816

Hence, interest paid at the time of maturity is Rs. 816.