Question 11

If a principal P amounts to A in two years when compounded half yearly with r% interest. The same principal P amounts to A in two years when compounded annually with R% interest, then which of the following relationship is true?

Solution

Since in first case we are compounding half-yearly and in second case we are compounding yearly and the amount received and the principal invested in both the cases is same so interest rate in the first case is lower than the interest rate in the second case.

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IIFT 23rd Dec 2021 Slot 1

If a principal P amounts to A in two years when compounded half yearly with r% interest. The same principal P amounts to A in two years when compounded annually with R% interest, then which of the following relationship is true?

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