Find the compound interest on ₹20,000 at 20% p.a for 1 $$\frac{1}{2}$$​ years compounded half-yearly.

Correct option is A

Given:

Principal P = ₹20,000

Annual rate R = 20%

Time T = 1.5 years

Compounded half-yearly

Formula Used:

A = $$P \times \left(1 + \frac{r}{100}\right)^N$$​​

Compound Interest = A - P

Solution: 

For half-yearly

Number of compounding periods per year n = 2

Total periods N = 1.5 × 2 = 3

Rate per period r = $$\frac{20}{2}$$​ = 10%

Amount, A = $$20000 \times \left(1 + \frac{10}{100}\right)^3$$​​

​$$= 20000 \times (1.1)^3$$​​

$$= 20000 \times 1.331$$​ = 26620

Compound interest = 26620 - 20000 = ₹6,620