What is the compound interest (in ₹ , rounded off to two decimal places) on ₹20,000 in two years at 4% per annum, the interest being compounded half-yearly?
Show answer & explanation
Correct answer: B
Explanation
The correct answer is option 2 i.e. 1648.64
Formula used:
CI = P(1 + R/100)T - P ----- (1)
CI = Compound interest, P = principal, R = rate and T = time
Calculations:
When interest is compounded half yearly;
T = 2T and R = R/2
⇒ CI = 20000(1 + 2/100)4 - 20000
⇒ CI = 20000 × (51/50)4 - 20000
⇒ 1648.64