Question

What is the difference between compound interest on rs. 5,000 for 1 years at 4% per annum the interest is compounded yearly and half-yearly ?

Answer 1

Answer : Option A

Explanation : Amount after 11⁄2 years when interest is compounded yearly  

Compound Interest for 1 1⁄2 years when interest is compounded yearly  

= Rs.(5304 - 5000)

Amount after 11⁄2 years when interest is compounded half-yearly

Compound Interest for 1 1⁄2 years when interest is compounded half-yearly  

= Rs.(5306.04 - 5000)

Difference in the compound interests = (5306.04 - 5000) - (5304 - 5000) = 5306.04 - 5304 = Rs. 2.04