What amount is to be repaid on a loan of rupees 12000 for 1.5 years at 10% compounded half yearly?

What total amount is to be paid on a sum of Rs. 12,000 for \(1 \frac{1}{2}\) years at 10% per annum compounded half yearly?

1. Rs. 13,891.50
2. Rs. 19,831.50
3. Rs. 31,918.50
4. Rs. 13,230.50

Answer (Detailed Solution Below)

Option 1 : Rs. 13,891.50

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Given:

The sum = Rs 12,000

Time = \(1 \frac{1}{2}\) years

Rate = 10% p.a.

Formula used:

A = P(1 + R/100)t

Here, A, P, R and t are the Amount, Principal, Rate and time respectively

Concept used:

When compounded half-yearly then,

Rate is half and time is doubled

Calculation:

Rate = 10%/2 = 5% and Time = \(1 \frac{1}{2}\) × 2 = 3 half yearly

Now, A = P(1 + R/100)t

⇒ A = 12000(1 + 5/100)3

⇒ A = 12000 × 21/20 × 21/20 × 21/20

⇒ A = 13891.5

∴ The total amounts to be paid is Rs 13891.50

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Let's discuss the concepts related to Interest and Compound Interest. Explore more from Quantitative Aptitude here. Learn now!

What amount is to be repaid on a loan of Rs. 12000 for $ 1\dfrac{1}{2} $ year at 10% per annum if interest is compounded half-yearly.

Answer

Verified

Hint: To calculate compound interest, we have given formula:
 $ A=P{{\left( 1+\dfrac{r}{100} \right)}^{t}} $
Where, A = final amount
P = initial amount
r = interest rate
t = number of time periods
Hence, compound interest is the difference of final amount and initial amount.
 $ \Rightarrow CI=A-P $
Substitute the values in the formula to calculate compound interest.

Complete step-by-step answer:
As given in the question, the interest is compounded half-yearly, therefore the rate of interest is reduced half times.
That means, interest rate = 10% per annum, so, for compounding half-yearly, the interest rate = 5%.
So, r = 5 %
In the given question, the time period is $ 1\dfrac{1}{2} $ , i.e. three times a six-months interval.
So, t = 3
We have principal = Rs 12000
Using values of P, r and t, we get amount (A) as:
 $ \begin{align}
  & {{\left( SI \right)}_{3}}=\dfrac{{{A}_{2}}\times r\times t}{100} \\
 & =\dfrac{13230\times 5\times 1}{100\times 2} \\
 & =Rs.661.50
\end{align} $
Hence, Amount = Rs 13891.50

So, compound interest is:
 $ \begin{align}
  & CI=A-P \\
 & =13891.50-12000 \\
 & =1891.50
\end{align} $
Hence, compound interest = Rs 1891.50

Note: The other way to find compound interest compounded half-yearly is applying simple interest for every 6 months for the same interest rate and adding the interest in the initial value to calculate for another 6 months until for the total time period:
As it is given:
P = Rs 12000
r = 5%
t = $ 1\dfrac{1}{2} $ years = 3 $ \times $ 6 months
So, Simple interest for first 6 months is:
 $ \begin{align}
  & {{\left( SI \right)}_{1}}=\dfrac{P\times r\times t}{100} \\
 & =\dfrac{12000\times 5\times 1}{100\times 2} \\
 & =Rs.600
\end{align} $
Amount after first 6 months is:
\[\begin{align}
  & CI={{\left( SI \right)}_{1}}+{{\left( SI \right)}_{2}}+{{\left( SI \right)}_{3}} \\
 & =600+630+661.50 \\
 & =Rs.1891.50
\end{align}\]

Now, consider $ {{A}_{1}} $ as principal for another 6 months. So simple interest for another 6 months is:
 $ \begin{align}
  & {{\left( SI \right)}_{2}}=\dfrac{{{A}_{1}}\times r\times t}{100} \\
 & =\dfrac{12600\times 5\times 1}{100\times 2} \\
 & =Rs.630
\end{align} $
Amount after another 6 months is:
 $ \begin{align}
  & {{A}_{2}}={{A}_{1}}+{{\left( SI \right)}_{2}} \\
 & =12600+630 \\
 & =Rs.13230
\end{align} $

Now, consider $ {{A}_{2}} $ as principal for another 6 months. So simple interest for another 6 months is:
 $ \begin{align}
  & {{\left( SI \right)}_{3}}=\dfrac{{{A}_{2}}\times r\times t}{100} \\
 & =\dfrac{13230\times 5\times 1}{100\times 2} \\
 & =Rs.661.50
\end{align} $
Final amount after another 6 months is:
 $ \begin{align}
  & {{A}_{3}}={{A}_{2}}+{{\left( SI \right)}_{3}} \\
 & =13230+661.50 \\
 & =Rs.13891.50
\end{align} $

Hence, total interest is
\[\begin{align}
  & CI={{\left( SI \right)}_{1}}+{{\left( SI \right)}_{2}}+{{\left( SI \right)}_{3}} \\
 & =600+630+661.50 \\
 & =Rs.1891.50
\end{align}\]

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