The simple interest on a certain sum for 3 and half years at the rate of 10% per annum is ₹2,940. What will be the compound interest (in ₹) on the same sum for 1 and half years at the same rate when interest is compounded half-yearly (nearest to a rupee)?
Show answer & explanation
Correct answer: C
Explanation
The correct answer is option 3 i.e. 1324
Formula used
S.I. = (P × R × T)/100
For CI is A = P(1 + R/100)T
CI = A – P
where P = Principal, R = Rate of Interest in % per annum, and T = Time
Calculation
2940 = (P × 10 × (7/2))/100
P = 8400
Now, we calculate CI at half yearly compounded
R = 10/2 = 5%
T = 105 *2 = 3 years
A = 8400 * (1 + 5/100)3 = (8400 * 9261)/ 8000 = 9724.05
CI = A – P = 9724.05 - 8400 = 1324 Rs