An amout of Rs. 10,000 becomes Rs. 14,641 in 2 years if the interest is compounded half-yearly. What is the rate of compound interest per annum?
Explanation:
Let the interest rate be r% p.a.
If compounding is done n times in a year, the amount due after t years can be calclated as P×1+r/n100t×n
Here, compounding in done 2 times in a year, hence n = 2.
⇒ 14641 = 10000×1+r/21002×2
⇒ 14641 = 10000×1+r/21004
⇒ 114 = 104×1+r/21004
⇒ 11 = 10×1+r/2100
⇒ 1+r/2100 = 1.1
⇒ r/2 = 10
⇒ r = 20%
Hence, option (c).
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