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Discussion :: Compound Interest

  1. What is the difference between the compound interests on Rs. 5000 for 1\(\frac { 1 } { 2 } \) years at 4% per annum compounded yearly and half-yearly?

  2. A.

    Rs. 2.04

    B.

    Rs. 3.06

    C.

    Rs. 4.80

    D.

    Rs. 8.30

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    Answer : Option A

    Explanation :

     C.I. when interest compounded yearly   =Rs= [5000\( * [1+\frac { 4 } {100 }] *\)[1+\( \frac { 1/2*4 } {100 })]\)

                                                                 

                                                                     Rs=[5000\(* \frac { 26 } { 25 }\)\(* \frac { 51 } { 50 }\)]

                                     

                                                                      Rs=5304.

     

     C.I. when interest compounded  half-yearly =Rs.[5000\( (1+\frac { 2} {100 })^3]\)

                                           

                                                                       =RS.[5000\(* \frac { 51 } { 50 }\)\(* \frac { 51 } { 50 }\)\(* \frac { 51 } { 50 }\)]

                                           

                                                                      =RS.5304.04

     

           Difference = Rs. (5306.04 - 5304) = Rs. 2.04


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