Question

what will be the difference in the compound interest on rs50,000 at 12% for one year when the interest is paid half yearly and yearly​

Answer 1

Compound Interest = {Principal(1+rate/100)^ time} - Principal

when rate is compound half yearly then time is multiplied by 2 and 100 is taken as 100x2.

here,

Principal = 50,000.00

rate = 12%

and time = 1 year

For annually,

Interest={50000(1+12/100)^1 }-50000= {50000(1.12)}-50000 = 56000–50000 = 6000 [Interest in 1 year when you get 12% interest compounded yearly]

For Half Yearly,

Interest = {50000(1+12/200)^2}-50000 = {50000(1.06)^2}-50000 = {50000(1.1236)}-50000 = 56180–50000 = 6180 [Interest in 1 year when you get 12 % interest compounded half yearly]