What will be the difference in compound interest on a sum of ₹ 7,800 at 8% for 1 year, when the interest is paid yearly and half yearly?

Principal(p) = 7800

Rate of interest(r) = 8%

time(t) = 1 year

Interest when paid yearly = $$p(1 + r/100)^t - p = 7800 \times (1 + 8/100) - 7800$$

= 7800 $$\times$$ 108/100 - 7800 = 8424 - 7800 = 624

Interest when paid yearly,

t = 1$$\times$$ 2 = 2

r = 8/2 = 4%

Interest = $$7800 \times (1 + 4/100)^2 - 7800 = 7800 \times (104/100) \times (104/100) -7800 = 8436.48 - 7800 = 636.48$$

Difference = 636.48 - 624 = ₹ 12.48