Question

A man deposited Rs. 5,000 in a Bank which gives 12% interest compounded half yearly. How much he get back after one year?

• A. Rs. 5,300
• B. Rs. 6,000
• C. Rs. 5,618
• D. Rs. 5,318

Answer 1

Answer:

C. Rs. 5,618

The man will get back Rs. 5,618 after one year from the bank.

• Principal amount (P): Rs. 5,000

• Annual interest rate (R): 12%

• Compounding frequency: Half-yearly (twice a year)

• Time period (t): 1 year

Calculation

• Half-yearly rate (r): 12% / 2 = 6% (0.06)

• Compounding periods (n): 1 year × 2 = 2

• Formula: Amount = P × (1 + r)ⁿ

• Step 1: Amount = 5,000 × (1 + 0.06)²

• Step 2: Amount = 5,000 × (1.06)²

• Step 3: Amount = 5,000 × 1.1236

• Total Return: Rs. 5,618

The interest earned is Rs. 618.