Find the compound interest on Rs. 5000 in 2 years at 4% per annum, the interest being compounded half yearly.
R 412.16
R 312.16
R 400.16
R 420.16
Here, Principal P = Rs. 5000
Rate R = 4% pa
Time n = 2 years
Now according to the formula,
$\text { Amount } =\mathrm{P}\left(1+\frac{R}{2 \times 100}\right)^{2 n}=5000\left(1+\frac{4}{200}\right)^4$
$ =\left(5000 \times \frac{51}{50} \times \frac{51}{50} \times \frac{51}{50} \times \frac{51}{50}\right)=\left(\frac{51 \times 51 \times 51 \times 51}{1250}\right)$
$=\mathrm{R} 5412.16$
$\therefore Compound Interest = R (5412.16 – 5000) = R 412.16$