Radha takes a loan of Rs.4,00,000 at 14% per annum compound interest, compounded half-yearly. What is the interest that she repays after 2 years?
Show answer & explanation
Correct answer: B
Explanation
The correct answer is option 2 i.e. Rs.1,24,318.40
Given that
The principal amount loan of Rs.4,00,000
The compound interest (r) = 14%
Time = 2 years
Compounded half yearly, now
r = 14/2 = 7%
Time t = 4 years
Formula used
A = P (1 + r / 100) t
C.I. = A - P
Calculation
A = 400000 (1 + 7/100)4
A = 400000 (107/100)4
A = 524318.40 Rs
Now, C.I. = A - P = 524318.40 - 400000 = 124318.40 Rs