A bank offers 5% compound interest calculated on half-yearly basis. A customer deposits Rs. 1600 each on 1st January and 1st July of a year. At the end of the year, the amount he would have gained by way of interest is:

A. Rs. 119

B. Rs. 120

C. Rs. 121

D. Rs. 122

View Answer

Correct Answer :
Rs. 121

Explanation :

Amount = Rs. [ 1600 x ( 1 + 5 / (2 x 100) )² + 1600 x ( 1 + 5 / (2 x 100) )² ]

= Rs. [ 1600 x (41/40) x (41/40) + 1600 x (41/40) ]

= Rs. [ (1600 x 41 x 81) / (40 x 40) ]

= Rs. 3321

=> C.I = Rs. (3321 - 3200) = Rs. 121

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