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A bank offers 5% compound interest calculated on half-yearly basis. A customer deposits Rs. 1600 each on 1st January and 1st July of a year. At the end of the year, the amount he would have gained by way of interest is:

Correct Answer: Rs. 121

Explanation:

Amount
= Rs. [ 1600 x ❨ 1 + 5 ❩ 2 + 1600 x ❨ 1 + 5 ❩ ]
2 x 100 2 x 100
= Rs. [ 1600 x 41 x 41 + 1600 x 41 ]
40 40 40
= Rs. [ 1600 x 41 ❨ 41 + 1 ❩ ]
40 40
= Rs. [ 1600 x 41 x 81 ]
40 x 40
= Rs. 3321.
∴ C.I. = Rs. (3321 - 3200) = Rs. 121

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