How much amount needs to repaid if a sum of Rs.40000 is borrowed for 3 years at a rate of 5% per annum, compounded half-yearly?

Given :

Principal $= Rs. 40000$

Time $= 3$ years

Rate of interest $= 5$% per annum

To do :

We have to find the amount to be repaid.

Solution :

Interest is compounded half yearly, this implies

Rate of interest half yearly $= \frac{5}{2}$% $= 2.5$%.

Number of intervals n $= 3\times2 = 6$

Amount to be repaid $= A = P (1+ \frac{R}{100})^n$ 

                                            $ = Rs. 40000 (1+\frac{2.5}{100})^6$

                                             $= Rs. 40000(\frac{41}{40})^6$

                                             $= Rs. 46387.7$.

Therefore, the amount to be repaid is Rs.46387.7.

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Updated on: 10-Oct-2022

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