Aptitude - Compound Interest - Discussion

How n=1? for half year n=1/2 means 2n=2*1/2 it gives 1 right?

Anyone, please explain to me to get it.

I still don't understand what is n=? In this formula for calculating compound interest half year.

A = P[1+R/200]^2n.
Is it the no of slots like n=2 for 1 year, because Two six months slots(6 months+ 6 months).
Or is it n=1/2 because it is half of 1 year.

Please explain it clearly.

Half yearly calculation is not correct.

As for half yearly, Amount = P[1+R/100]2N; so for this context, it seems to be 1, if half yearly (2*1/2=1).

How is it possible to give the time still as 2 years?

Please explain.

Thank you.

@Durga.

There is no 106.09-106.

There's 106.09-100=6.09.

How to get Rs100(p=100)?

Suppose i am taking Rs200 or 300. I am not getting the answer.

Can you explain it please?

@Durga.

106.09-106 = ?
10690/100 -106 = 6.09.

Let principal, P be Rs.100

Amount after 1 year on Rs.100 at 6% per annum when interest is compounded half-yearly

=P(1+(R/2)/100)^2T,
=100(1+(6/2)/100)^2*1,
=100(1+3/100)^2,
=100(103/100)^2,
=100*103*103/100*100,
=103*103/100,
=106.09.

This means, if interest is compounded half-yearly at 6%, Rs.100 becomes Rs.106.09 after 1 year

Now, we need to find out the rate of interest on which Rs.100 becomes Rs.106.09 after 1 year.

when the interest is compounded annually

P(1+R/100)^T=106.09
100(1+R/100)^1=106.09
100(1+R/100)=106.09
100+R=106.09
R=106.09/100=6.09%.

i.e, effective annual rate of interest is 6.09%

What is effective rate?

How to solve if there is a whole year?

Please explain.