Multiple choice

The simple interest on a sum of money for 2 years at 5% per annum is Rs. 480. What is the compound interest on that sum of money for one year payable half-yearly at the same rate?

  1. Rs. 280

  2. Rs. 213

  3. Rs. 243

  4. Rs. 253
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Simple interest for 2 years at 5% is 10% of principal = 480, so principal = 4800. Compound interest for 1 year at 5% compounded half-yearly (2.5% per half-year) = 4800 * (1.025^2 - 1) = 4800 * 0.050625 = 243.

AI explanation

Using the simple interest formula, the principal sum is (480 * 100) / (2 * 5) = Rs. 4800. For the compound interest compounded half-yearly, the new rate is 2.5% per half-year and the time is 2 periods. Using the formula, the compound interest is 4800 * (2.5 + 2.5 + (2.5 * 2.5)/100) / 100, which simplifies to 48 * 5.0625. This calculation gives Rs. 243. The interest is Rs. 243.

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