Vijay lent 20,500 for 2 years at 25% per annum compounded annually. How much more
could he earn if the interest is compounded half yearly?
.
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Answer:
P= Rs 10000
R=20% p.a
n=2 years
A=P(1+
100
R
)
n
A=10000(1+
100
20
)
2
A=10000(1.2)
2
A=14400
When the interest is compounded half-yearly,
We have:
A=P(1+
200
R
)
2n
A=10000(1+
200
20
)
4
A=10000(1.1)
4
A= Rs 14641
Difference = Rs 14641– Rs 14400= Rs 241
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