Question

A college student bought a new bike and he got insurance for it. He is paying that money at simple interest, but he should include the interest for every six months for calculating the principal. If he undergoes a charge at an interest rate of 15%, the effective rate of interest becomes:
a)15.56% b)23 % c)25% d)21% ​

Answer 1

Answer:

a) 15.56

Step-by-step explanation:

it's is simple to find the effective rate of interest of compound interest at 15% compounded semi annually

we know that successive percentage increased is calculated by a+b+ab/100

15/2=7.5 the increase is 7.5%

7.5+7.5+(7.5*7.5/100)

=15+0.5625

=15.56

Answer 2

Answer:

The effective rate of interest is $15.56$

Step-by-step explanation:

The effective rate of interest of compound interest at $15$% compounded semi annually.

Using formula, the successive percentage increased is calculated by

$a+b+\frac{ab}{100}$

Here $a=b=\frac{15}{2} =7.5$

Hence, applying here we get

$7.5+7.5+\frac{7.5}{100}$

$=15+0.5625$

$=15.56$

Option a) is correct.

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