A person deposited Rs. 80,000 in bank ‘P’ for 2 years at the rate of 10% annual compound interest. But after one year bank has changed the p

Question

A person deposited Rs. 80,000 in bank ‘P’ for 2 years at the rate of 10% annual compound interest. But after one year bank has changed the policy and decided to pay semi-annual compound interest at the same rate. What is the percentage difference between compound interests of the first year and second year? Give reason with calculation:​

in progress 0
Sapo 5 years 2021-08-16T22:22:12+00:00 1 Answers 590 views 1

Answers ( )

  1. Thunguyet
    0
    2021-08-16T22:24:00+00:00
    Reply

    Answer:

    compound interest in year 2 is 12.75% than compound interest in year 1. This is because semi annual compounding yield a higher compound interest

    Step-by-step explanation:

    compound interest = future value – present value

    The formula for calculating future value:

    FV = P (1 + r/m)^nm

    FV = Future value  

    P = Present value  

    R = interest rate  

    N = number of years

    m = number of compounding  

    compound value in the first year = 80,000(1.1)^1 = 88,000

    compound interest = 88,000 – 80,000 = 8,000

    compound interest in the second year = 88,000(1 + 0.01/2)^2 = 97,020

    compound interest = 97,020 – 88,000 = 9020

    Percentage change = (9020 / 8,000) – 1 = 12.75%

Leave an answer

Browse

Giải phương trình 1 ẩn: x + 2 - 2(x + 1) = -x . Hỏi x = ? ( )