If Rs. 1000 is invested at 12% interest and interest is compounded half yearly, what will be the total amount at the end of one year ?

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Submitted by examrobotsa on

Q: 139 (IAS/1994)
If Rs. 1000 is invested at 12% interest and interest is compounded half yearly, what will be the total amount at the end of one year ?

question_subject: 

Maths

question_exam: 

IAS

stats: 

0,9,19,8,9,4,7

keywords: 

{'total amount': [0, 1, 0, 0], 'interest': [1, 3, 3, 15], 'year': [27, 4, 33, 49]}

In the question, it`s given that the interest is compounded half yearly. That means the interest is calculated twice a year. The formula for compound interest is A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest. P is the principal amount (the initial amount of money), and r is the annual interest rate (in decimal form. So,12% is 0.12). n is the number of times that interest is compounded per year.

In this case, P is Rs. 1000, r is 0.12, t is 1 year, and n is 2 (as interest is compounded half yearly).

After substituting these into the formula, the total amount after one year would be Rs. 1123.60. Therefore, the correct answer is option 2.

Options 1, 3 and 4 represent different calculations of interest rates or compounding frequency, but they do not match the given conditions in the question.