Rs. 6000 is lent at the rate of 20 percent per annum on compound interest (compounded half yearly). What will be the compound interest of 18 months?

Question

Question

This question was previously asked in

SSC CHSL Tier-I Exam 2022 Official Paper (Held On: 13 March, 2023 Shift 2)

Answer 1

Given:

Principal = Rs. 6000

Rate = 20%

Time = 18 months

Concept Used:

A = P × (1 + r/n)^(nt)

Where:
A = Amount

P = Principal

r = Annual interest rate

n = Number of times the interest is compounded per year

t = Time period (in years)

Calculation:

The interest is compounded half-yearly, so n = 2 (twice a year).

The time period (t) is 18 months, which is equivalent to 1.5 years.

Rate, r = 20% = 0.20

Let's substitute these values into the formula:

A = 6000 × (1 + 0.20/2)^{(2 × 1.5)}

⇒ 6000 × (1 + 0.10)³

⇒ 6000 × 1.10³

⇒ 6000 × 1.331

⇒ A = Rs. 7986

Compound interest = A - P

⇒ 7986 - 6000

⇒ Rs. 1986

Therefore, the compound interest for 18 months at a rate of 20% per annum, compounded half-yearly, would be Rs. 1986.

∴ Option 2 is the correct answer.

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