Question

Find the difference between CI and S.I on 5000 for 1 year at 2% pa, if the interest is
compounded half yearly.​

Answer 1

Answer:

The difference between CI and SI in the given problem is Rs.0.50 (or half a rupee or 50 paise)

Step-by-step explanation:

Simple Interest (SI)

P = initial amount; R = rate of interest % per year; T = number of years

P = 5000; R = 2% per year; T = 1

SI = P*R*T/100 = (5000*2*1)/100 = 100

Compound interest

Since the compounding is half-yearly, we have final amount (A) given by:

A = P * (1 + (R/2)/100)^(2T)

A = 5000 * (1 + (2/2)/100)^(2*1)

   = 5000 * (1 + 0.01)^2

   = 5000 * (1.0201)

   = 5100.50

CI = Final amount - Initial amount

    = 5100.50 - 5000

    = 100.50

Difference in CI and SI is:

CI - SI = 100.50 - 100

          = 0.50