What will be the amount after 1 year, if ₹7500 is invested at 8% compound interest per annum, compounded half-yearly?

Appeared in: NCL (Northern Coalfields Limited)-NO

Explanation

The question asks for the final amount after 1 year on a principal of ₹7500 at an 8% annual interest rate, compounded half-yearly.
The formula for compound amount is A = P(1 + r/n)^(nt), where P=₹7500, r=0.08, n=2 (half-yearly), and t=1 year.
The rate per period is 8%/2 = 4% or 0.04.
The number of periods is 1 year * 2 = 2.
Calculation: A = 7500 * (1 + 0.04)² = 7500 * (1.04)² = 7500 * 1.0816 = ₹8112.

Option A: This amount is incorrect. It does not result from the correct application of the compound interest formula for half-yearly compounding.
Option B: This amount is incorrect. It is significantly higher than the amount calculated using the correct formula.
Option C: This amount is incorrect, although close to the correct answer. This value may arise from a slight miscalculation, such as rounding prematurely or using a slightly different interest rate.

Visual 1: Flowchart: Step-by-step process for calculating compound interest. This would visually guide the user from identifying the variables (P, r, n, t) to applying the formula and reaching the final answer.
Visual 2: Infographic: Comparing Simple Interest vs. Compound Interest. This would illustrate how compound interest earns interest on previously earned interest, leading to faster growth, which is the core concept tested.

Clinical Relevance

Nursing practice connection: This is primarily an exam-oriented knowledge point with limited direct bedside application, so retain Compound Interest as background academic context rather than a clinical decision trigger.
This is a quantitative aptitude question designed to test mathematical skills. It does not have direct clinical relevance to nursing practice.
What if? - If the stem changed one defining clue so that ₹8112 no longer matched, reassess the option whose mechanism, classification, or indication now fits the revised presentation.

How to Approach the Question

First, identify the type of question. This is a mathematical problem involving compound interest.
Carefully read the question to extract all the given values: Principal (P), annual interest rate (r), and time (t).
Pay close attention to the compounding frequency (n). Here, it is 'compounded half-yearly,' which means n=2.
Recall the formula for compound interest: A = P(1 + r/n)^(nt).
Substitute the identified values into the formula: P=7500, r=0.08, n=2, t=1.
Perform the calculation step-by-step to avoid errors: first calculate the term inside the parenthesis, then the exponent, and finally multiply by the principal.

Concept Tested & Keywords

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Practise the full NCL (Northern Coalfields Limited)-NO

Attempt every question from this paper in a timed mock, then review the full solution for each one.