A sum of money amounts to ₹16,800 in one year and to ₹17,472 in one and a half years on the basis of interest compounded semi-annually. What is the rate of interest per annum?
Show answer & explanation
Correct answer: C
Explanation
The correct answer is option 3 i.e. 8%.
Time difference = 1.5 years – 1 year = 0.5 years = 1 semi-annual period
Interest for 1 semi-annual = 17,472 – 16,800 = ₹672
Rate for 6 months = = 4%
Annual rate = 4% × 2 = 8%