Hey pls i need solution
A person deposited rs 100000 in a bank X for two years at 10% annual interest. But after one year bank has changed policy and decided to pay semi annual compound interest at the same rate. what is the percentage difference between compound interest of the first year and second year?
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hey bro
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12.75% Increase
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The 1st year is simple interest, due to the fact that interest has not yet compounded.
Well first year interest is:
= 100000 × 10/100
= 1st year's interest : 10000
Now Total Principal: 100000 + 10000 = 110000
2nd year semi annual interest:
Formula P (1 + r/2/100)^(nt)
Final Amount= 110000 ( 1 + (10/2)/100)²
=110000 ( 1 + 5/100)²
= 110000 × 1.1025
Final Amount= 121275
2nd year Interest = 121275 - Principal
= 121275 - 110000
2nd year interest = 11275
Change in Percentage :
= (New value - Old value) ÷ old value × 100
= 11275 - 10000
= 1275 ÷ 10000 × 100
= 12.75% increase
All the best
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