What is the difference between the compound interest, when interest is compounded 5-monthly, and the simple interest on a sum of Rs. 12,000 for 1 1/4 years at 12% per annum?
Show answer & explanation
Correct answer: D
Explanation
Correct Answer is option 4 i.e. Rs. 91.5
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Concept |
Understanding |
Application |
Fair calculation |
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SI = (P × r × t)/100 CI = P[1 + r/100]t |
P = Rs. 12000 For SI: Annual Interest rate = 12% Time = 5/4 years For CI: Interest rate for 5-monthly = 12 × 5/12 = 5% 5/4 year = 15 months Time = = 3 (5-monthly) |
SI = [12000 × 12 × 5/4]/100 = Rs. 1800
CI = [12000[1 + 5/100]3 – 12000] ⇒ 13891.5 – 12000 ⇒ 1891.5
Required difference = 1891.5 – 1800 = Rs. 91.5 |
[12000 × 12 × 5/4]/100 ⇒ 120 × 15 = 1800
[12000[1 + 5/100]3 – 12000] ⇒ [12000 × 21/20 × 21/20 × 21/20 – 12000] ⇒ [1.5 × 9261 – 12000] ⇒ 13891.5 – 12000 ⇒ 1891.5 |