The difference in the compound interest on a certain sum at 10% p.a. for one year, when the interest is compounded half-yearly and yearly, is 88.80. What is the simple interest on the same sum for 1 year and 8 months at the same rate?
Show answer & explanation
Correct answer: A
Explanation
The correct answer is Option 1 i.e Rs. 5920
Difference in the interest between yearly and half-yearly = 88.80
So,
P × (5/100)2 = 88.8
P × 1/400 = 88.8
P = 8880 × 4
= 35520
S.I. = (35520 × 10 × 5) / 300
= Rs. 5920