Find the compound interest on Rs 50,000 for one year at 8% per annum when compounded half yearly.
Show answer & explanation
Correct answer: C
Explanation
Correct answer is option 3 i.e. Rs 4080.
Given:
Principal = Rs 50000
Rate = 8%
Time = 1 year
Concept used:
When the interest is compounded half-yearly,
T = 2T and R = R/2
CI = P(1 + R/200)2T - P
Where, CI = Compound interest, P = principal, R = rate and T = time period
Calculations:
Interest is compounded half-yearly,
T = 2 and R = 8/2 = 4%
According to the question,
⇒ CI = 50000(1 + 4/100)2 - 50000
⇒ CI = 54080 - 50000
⇒ CI = 4080