A person invests Rs 80,000 in a financial product that yields interest compounded semi- annually. After 1.5 years, the interest accrued totals Rs 26,480.
(i) Find the interest rate per annum. ​



Answer :

Answer:

20%

Step-by-step explanation:

To find the interest rate per annum, we can use the Compound Interest formula:

[tex]\boxed{\begin{array}{l}\underline{\textsf{Compound Interest Formula}}\\\\A=P\left(1+\dfrac{r}{n}\right)^{nt}\\\\\textsf{where:}\\\phantom{ww}\bullet\;\;\textsf{$A$ is the final amount.}\\\phantom{ww}\bullet\;\;\textsf{$P$ is the principal amount.}\\\phantom{ww}\bullet\;\;\textsf{$r$ is the annual interest rate (in decimal form).}\\\phantom{ww}\bullet\;\;\textsf{$n$ is the number of times interest is applied per year.}\\\phantom{ww}\bullet\;\;\textsf{$t$ is the time (in years).}\end{array}}[/tex]

The final account balance (A) is the sum of the interest accrued (Rs 26,480) and the principal invested (Rs 80,000).

Therefore, in this case:

  • A = Rs 26,480 +  Rs 80,000 = Rs 106,480
  • P = Rs 80,000
  • n = 2 (semi-annually)
  • t = 1.5 years

Substitute the values into the formula and solve for r:

[tex]106480=80000\left(1+\dfrac{r}{2}\right)^{2 \cdot 1.5}\\\\\\\dfrac{106480}{80000}=\left(1+\dfrac{r}{2}\right)^{3}\\\\\\1.331=\left(1+\dfrac{r}{2}\right)^{3}\\\\\\\sqrt[3]{1.331}=1+\dfrac{r}{2}\\\\\\1.1=1+\dfrac{r}{2}\\\\\\\dfrac{r}{2}=1.1-1\\\\\\\dfrac{r}{2}=0.1\\\\\\r=0.1 \cdot 2\\\\\\r=0.2\\\\\\r=20\%[/tex]

Therefore, the interest rate per annum is:

[tex]\LARGE\boxed{\boxed{\sf 20\%}}[/tex]

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