Question 99

What is the difference (in Rs) between the compound interests on Rs 12,500 for 1 year at 8% per annum compounded yearly and half-yearly?

Solution

Annual compound interest=$$\left\{12500\left(1+0.08\right)^1-12500\right\}=1000\ Rs.$$

Half-yearly compound interest= $$\left\{12500\left(1+\frac{0.08}{2}\right)^{1\times2}-12500\right\}=1020\ Rs.$$

So, their difference is= (1020-1000) Rs.=20 Rs.

C is correct choice.

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