Question

8. Find the difference in compound interest on ? 5,000 for 1 year at the rate of 8% per annum iſ in the
first case interest is paid annually and in the second case semi-annually.
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Answer 1

Answer:

Rs. 8

Step-by-step explanation:

For interest paid annually,

Total = P (1 + r)^t

Total = 5000 (1 + 8/100)^1

Total = 5000 × 1.08

Total = 5400 Rs

For interest paid semiannually,

Total = P (1 + r)^t

Total = 5000 (1 + 4/100)^2

Total = 5000 × 1.04^2

Total = 5000 × 1.0816

Total = 5408 Rs

Hence, the difference in compound interest annually and semiannually is 5408-5400 = Rs 8.