# Michael borrowed Rs.16000 from a finance company at 10% per annum, compounded half-yearly. What amount of money will discharge his debt after 1years?

Present value = Rs.16000

Interest rate = 10% per annum

Time = (3/2) years

Interest is compounded half-yearly.

Amount (A) = P [1 + (R/2)/100]2n [Where, P = Present value

R = Annual interest rate

n = Time in years]

A = 16000 [1 + (10/2)/100]3

A = 16000 [1 + 5/100]3

A = 16000 [1 + 1/20]3

A = 16000 [21/20]3

A = 16000 × 21/20 × 21/20 × 21/20

A = 2 × 21 × 21 × 21

A = 18522

Amount = Rs.18522

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