Karim lent out ₹1000 for 2 year at 20% per annum, compounded annually. How much more he could earn it the interest be compounded half- year.
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Answer:
Principal (p) = Rs 10000
Rate (r) = 20% per annum
Time (t) = 2years
By using the formula,
A = P (1 + R/100) n
= 10000 (1 + 20/100)2
= 10000 (120/100)2
= Rs 14400
When the interest is compounded half yearly,
Rate = 20/2 % = 10%
Time = 2×2 years = 4years
By using the formula,
A = P (1 + R/100) n
= 10000 (1 + 10/100)4
= 10000 (110/100)4
= Rs 14641
∴ Karimcould earn Rs (14641 – 14400) = Rs 241 more
(Mark as branilist)
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