Toggle navigation
Home
Study Room
AP Eamcet Engineering Online Mock Exams
AP Eamcet Medical Online Mock Exams
Exams
Features
Pricing
Login
Register
Study Room
Study Room
Arithmetic Ability
Lessons
Alligation or Mixture
Area
Average
Banker's Discount
Boats and Streams
Calendar
Chain Rule
Clocks
Compound Interest
Decimal Fractions
HCF and LCM
Height and Distance
Logarithms
Numbers
Odd Man Out and Series
Partnership
Percentage
Permutations and Combinations
Pipes and Cistern
Probability
Problems on Ages
Problems on Numbers
Problems on Trains
Profit and Loss
Races and Games
Ratio and Proportion
Simple Interest
Simplification
Square Roots and Cube Roots
Stocks and Shares
Time and Distance
Time and Work
True Discount
Volume and Surface Area
Goto
Arithmetic Ability
Simple Interest
Take Exam
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
Previous
39 / 98
Next
Q.
An amount of 5,000 is invested at a fixed rate of 8 per cent per annum. What amount will be the value of the investment in five years time, if the interest is compounded every six months?
A.
7401.22
B.
3456
C.
4567
D.
7890
View Answer
Correct choice: A
Explanation:
With slight modifications, the basic formula can be made to deal with compounding at intervals other than annually. Since the compounding is done at six-monthly intervals, 4 per cent (half of 8 per cent) will be added to the value on each occasion. Hence we use r = 0.04. Further, there will be ten additions of interest during the five years, and so n = 10. The formula now gives: V = P(1 + r)10 = 5,000 x (1.04)10 = 7,401.22 Thus the value in this instance will be £7,401.22. In a case such as this, the 8 per cent is called a nominal annual rate, and we are actually referring to 4 per cent per six months.
Previous
39 / 98
Next