Question

a person deposited 55000 in bank for 2 years at rate of 10% per annum compounded annually but after 1 year bank has changed the policy and decided to pay semi-annual compounded interest at the same rate what is the percentage difference between the compound interest of 1st year and 2nd year give reason with calculation.​

Answer 1

Answer:

Principle Amount , p= Rs.55000

Rate of interest per annum, R = 10%

First year interest = p×(R/100) = 55000×(10/100) = Rs. 5500

First year Amount = Rs.55000+Rs.5500 = Rs.60500

Second year compounded amount = 60500×[ 1+ (10)/(2×100) ]2 = Rs.66701.25

Hence second year compound interest = 66701.25 - Rs.60500 = Rs.6201.25

percentage of second year compound interest = (6201.25/60500)×100 = 10.25 %

Hence difference in percentage of compound interest = 10.25 - 10 = 0.25%