Question:
Kamal borrowed Rs 57600 from LIC against her policy at $12 \frac{1}{2} \%$ per annum to build a house. Find the amount that she pays to the LIC after $1 \frac{1}{2}$ years if the interest is calculated half-yearly.
Solution:
Given:
$\mathrm{P}=\mathrm{Rs} 57,600$
$\mathrm{R}=12.5 \%$ p. a.
$\mathrm{n}=1.5$ years
When the interest is compounded half-yearly, we have:
$\mathrm{A}=\mathrm{P}\left(1+\frac{\mathrm{R}}{200}\right)^{2 \mathrm{n}}$
$=$ Rs $57,600\left(1+\frac{12.5}{200}\right)^{3}$
$=$ Rs $57,600(1.0625)^{3}$
$=$ Rs $69,089.06$
Thus, the required amount is Rs $69,089.06$.