What will be the approximate value of Rs 16,000 after 2 years if it is compounded semi-annually at an annual interest rate of 10%?

Explanation

Given: Principal (P) = Rs 16,000, Annual interest rate (R) = 10%, compounded twice a year. The half-yearly interest rate = 10% / 2 = 5%. Number of compounding periods (n) = 2 years × 2 = 4. The amount is calculated as A = P × (1 + r)^n = 16000 × (1 + 0.05)^4 = 16000 × (1.21550625) ≈ Rs 19,448.