CA Foundation P3 · Chapter 4 · Question 2 of 10
The compound interest on ₹20,000 for 1½ years at 10% per annum compounded half-yearly is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) ₹3,152.50
Explanation
Half-yearly rate = 10/2 = 5% and number of periods = 1.5 x 2 = 3. Amount = 20,000 x (1.05)³ = 20,000 x 1.157625 = ₹23,152.50, so CI = ₹3,152.50. Simple interest would be ₹3,000; using 10% for 3 periods gives ₹6,620; compounding annually (1.1^1.5) gives about ₹3,073.79.
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