Question

A person deposit Rs 55,000 in a bank for 2 years at 10% compound interest compounded annually. But after one year bank has changes the policy and decided to pay semi-annual compound interest at the same rate. What is the percentage difference between the compound interests of the first year and second year?

Answer 1

Answer:

interest is 12.75% more then 1st year

Step-by-step explanation:

first year compound interest

= principal amount X ( 1 + $\frac{R}{100} )^{T}$ -principal amount

= (55000 X ( 1 + $\frac{10}{100} )^{1}$ )-55000 Rs.

= 5500 Rs.

second year semi-annual compound interest = ( r/2 AND T x 2)

(principal amount = 55000 + 5500 ) = 60500 Rs.

= 60500 X ( 1 + $\frac{5}{100} )^{2}$ )-60500 Rs.

= 6201.25 Rs.

different = 6201.25 - 5500 Rs.

= 701.25 Rs.

% different = $\frac{701.25}{5500}$ X100

= 12.75 %