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How much interest will Tk. 1000 earn in one year at an annual interest rate of 20% if interest rate is compounded every 6 months?

How much interest will Tk. 1000 earn in one year at an annual interest rate of 20% if interest rate is compounded every 6 months? Correct Answer 210

A = P ( 1 + r/2)2n and, C.I = A - P Where, P = principal R = rate in percent p.a.( per annum i.e. annually) n = number of years. Here, P = 1000, R = 20% and n = 1 year. Amount after 1 year = P ( 1 + r/2)2n = 1000 ( 1 + 0.20/2)2*1 = 1000 ( 1 + 0.1)2 = 1000 (1.1)2 = 1000 x 1.21 Amount = 1210 ∴Compounded Interest = A−P. C.I = 1210−1000 C.I = 210 

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