Question : Find the amount (integral value only) if a sum of INR 6,500 is being borrowed at 10% interest per annum for 2 years if interest is compounded half-yearly.
Option 1: INR 8,250
Option 2: INR 7,650
Option 3: INR 8,150
Option 4: INR 7,900
Correct Answer: INR 7,900
Solution :
$A=P\times [1+\frac{R}{100}]^{n}$, where $A$, $P$, $R$, $n$, and $T$ are the amount, principal, the rate is half and n = 4 in two years, respectively.
According to the question,
$A=6500\times [1+\frac{5}{100}]^{2\times 2}$
⇒ $A=6500\times [1+0.05]^{4}$
⇒ $A=6500\times [1.05]^{4}$
$\therefore$ $A=$ INR 7,900
Hence, the correct answer is INR 7,900.
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