Question

If the difference between compound interest compounded half yearly and the simple interest on a sum of 10% p.a. for one year is ₹ 25. Then find sum.

Answer 1

Interest compounded half yearly in this case means 5% interest at intervals of six months, or twice in a year.

Effective interest rate = A + B + AB/100

5 + 5 + 5x5/100 = 10.25%

Simple interest = 10%

Difference is 0.25% and is given as Rs 25.

=> 0.25/100 x s = 25

=> s = 25 x 100/0.25 = Rs 10,000

Check :

SI on 10000 @ 10% = Rs 1000

CI on 10,000 @ 10% compounded half yearly = Rs 1025

Difference = Rs 25