Multiple choice

An amount was lent for one year at the rate of 10% per annum, compounding annually. Had the compounding been done half yearly, the interest would have increased by 80. What was the amount (in Rs.) lent?

  1. Rs. 16,000

  2. Rs. 32,000

  3. Rs. 48,000

  4. Rs. 64,000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Let P be the amount. Annual interest = 0.1P. Half-yearly interest = P * (1 + 0.05)^2 - P = 1.1025P - P = 0.1025P. Difference = 0.0025P = 80. P = 80 / 0.0025 = 32000.

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