Shortcut Trick
Ratio of Amount to Principal = 15972 ÷ 12000 = 1331/1000 = (11/10)3.
Since time is 3 half-years, compounding factor = 1.1 ⇒ half-yearly rate = 10%.
Annual rate = 10% × 2 = 20%.
For 1.5 years compounded annually, effective multiplying factor = 1.20 (for 1st year) × 1.10 (for 0.5 year) = 1.32.
New Amount = 12000 × 1.32 = 15840.
∴ The correct answer is Rs. 15,840.
Alternate Method
Given:
Principal (P) = Rs. 12,000
Amount (A) after 1.5 years = Rs. 15,972 (compounded half-yearly)
Time = 1.5 years = 3 half-years
Formula Used:
Compound Amount, A = P(1 + R/100)n
12,000
Principal
14,400
After 1 Year
15,840
After 1.5 Yrs
+20%
+10%
Annual Compounding Timeline
Calculations:
⇒ Let the annual rate of interest be R%.
⇒ For half-yearly compounding, rate = R/2 % and time = 3 periods.
⇒ 15972 = 12000 × (1 + R/200)3
⇒ (1 + R/200)3 = 15972 ÷ 12000
⇒ (1 + R/200)3 = 1331 ÷ 1000
⇒ 1 + R/200 = 11/10
⇒ R/200 = 1/10 ⇒ R = 20%
⇒ Now, the same sum is compounded annually for 1.5 years at 20% p.a.
⇒ Amount after 1st year = 12000 × (1 + 20/100) = 14400
⇒ Interest for the remaining 0.5 year = 14400 × (20/2)/100 = 1440
⇒ Final Amount = 14400 + 1440 = 15840
∴ The correct answer is Rs. 15,840.
Additional Information
Half-Yearly Compounding
When interest is compounded half-yearly, the rate of interest is halved (R/2) and the time period is doubled (2T).
Fractional Year Compounding
If time is given in fractions like t = n + a/b years, the formula used is: Amount = P(1 + R/100)n × (1 + (a/b × R)/100).
Simple vs Compound Interest Difference
For the first year, both Simple Interest and Compound Interest are exactly the same. The difference arises from the second period onwards as interest is calculated on accumulated interest.