Find the difference between the compound interest when compounded yearly and half yearly on a sum of Rs. 8,000 for 1 year at the rate of 10% per annum.
Show answer & explanation
Correct answer: D
Explanation
The correct answer is Option 4 i.e Rs. 20.
| Understanding/Application |
|
P = Rs. 8000 R = 10% When the interest is compounded yearly, T = 1 year C.I. when compounded yearly = 8000(1 + 10/100)1 = Rs. 8800 |
|
When the interest is compounded half-yearly, T = 2 years Rate = 10/2 = 5% C.I. when compounded half-yearly = 8000(1 + 5/100)2 = Rs. 8820 Difference = 820 - 800 = Rs. 20 |