What is the difference between the compound interest on ₹8,000 at 15% p.a. for 2 years when the interest is compounded yearly and when compounded 8-monthly?
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Correct answer: D
Explanation
The correct answer is option 4 i.e. ₹68.
CI when compounded yearly = 8000(1 + 15/100)2 - 8000
⇒ 8000(529 - 400)/400
⇒ 20 × 129 = 2580
For compounding 8-monthly, rate = 15/(12/8) = 10%
Time = 2 × 12/8 = 3 years
CI = 8000(1 + 10/100)3 - 8000
⇒ 8000(1331 - 1000)/1000
⇒ 8 × 331 = 2648
Required difference = 2648 - 2580 = 68