Question

Compound Interest Shubham lends a sum of Rs. 5500 to Sanjay. This has to repaid within a year. Find by what amount Shubham will get benefited if he lends the sum on a 20% annual rate of interest compounded half-yearly instead of a 20% rate of interest compounded yearly. 0 0 0​

Answer 1

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Answer 2

Answer:

Shubham will be benefited by Rs. 155 if he lends the money at the half yearly rate.

Step-by-step explanation:

Given the Principle = Rs. 5500

Rate of interest = 20%

Time = 1 year

Case I : if the money is lend at an annual rate

We know that A = $P(1 + \frac{r}{100})^t$

=> A =  $5500(1 + \frac{20}{100})^1$

        =  $5500(1 + \frac{1}{5})$

        =  $5500( \frac{6}{5})$

        =  6600

Case II : if the money is lend at an half-yearly rate

We know that A = $P(1 + \frac{r}{2*100})^2t$

=> A =  $5500(1 + \frac{20}{200})^2$

        =  $5500(1 + \frac{1}{10})^2$

        =  $5500( \frac{11}{10})^2$

        =  $5500( \frac{11}{10}) * \frac{11}{10}$

        =  6655

As 6655 > 6600

Shubham will be benefited if the lends the money at the half yearly rate.

The difference in the amounts = 6655 - 6500

                                                   = 155

Therefore, Shubham will be benefited by Rs. 155 if he lends the money at the half yearly rate.