CA Foundation · Quantitative Aptitude · Mathematics of Finance
Kiran invests ₹1,000 at the end of every half-year for 1 year in a scheme offering 20% per annum compounded half-yearly. What is the amount at the end of the year?
The amount is ₹2,100. The 20% annual rate compounded half-yearly is 10% per half-year over 2 periods. The first deposit grows to ₹1,100 and the second stays ₹1,000, totalling ₹2,100.
- A₹2,000
- B₹2,200
- C₹2,310
- D₹2,100Correct
Explanation
Half-yearly rate is 10% and there are 2 periods. FV = 1,000 × (1.21 − 1)/0.1 = ₹2,100, or 1,100 + 1,000. Using 20% per period gives ₹2,200, which ignores the half-yearly compounding.
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