Question 38

If the rate of interest is 8% per annum and Rs. 10000 lent at the compound interest half yearly then calculate the equivalent simple rate of interest for the first year?

Solution

Given R=8% pa=4% half yearly

T=1 yr=2(half years)

P=10,000

$$C.I=P(1+\frac{R}{100})^n-P$$

$$=10,000[(1+\frac{4}{100})^2-1]$$

$$=10,000\times\frac{51}{625}=816$$

Now P=10,000 S.I=816

T=1 yr R=?

$$R=\frac{S.I\times100}{P\times{T}}=\frac{816\times100}{10000\times1}$$

$$=\frac{816}{100}$$=8.16%

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