find the difference between the compound interest on rupees 25000 at 16 per annum for 6 months compounded half yearly and quarterly respectively which option is better
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Case1:when the interest is compounded half yearly,
P = 25000, R = 16/2=8%per year and T =6/12=1 half year
Interest for the first half year=P×R×T/100=2000
Case2: when the interest is compounded quarterly,
P=25000,R=16/4=4% per quarter and T=6/12=2 quarters
Interest for the first quarter=P×R×T/100=1000
Principal for the second quarter=25000+1000=26000
Interest for the second quarter=P×R×T/100=1040
Amount at the end of 2nd quarter=26000+1040=27040
Therefore, CI=A-P=2040
Therefore, difference between the two CIs=2040-200=240
Hence,the second option is better.
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P = 25000, R = 16/2=8%per year and T =6/12=1 half year
Interest for the first half year=P×R×T/100=2000
Case2: when the interest is compounded quarterly,
P=25000,R=16/4=4% per quarter and T=6/12=2 quarters
Interest for the first quarter=P×R×T/100=1000
Principal for the second quarter=25000+1000=26000
Interest for the second quarter=P×R×T/100=1040
Amount at the end of 2nd quarter=26000+1040=27040
Therefore, CI=A-P=2040
Therefore, difference between the two CIs=2040-200=240
Hence,the second option is better.
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