Multiple choice

Mr. Duggal invested Rs. 20,000 at a rate of 20%.p.a. The interest was compounded half yearly for the first year and in the next year, it was compounded yearly. What will be the total interest earned at the end of two years?

  1. Rs. 8,800

  2. Rs. 9,040

  3. Rs. 8,040

  4. Rs. 9,800

  5. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Year 1: 20000 at 20% compounded half-yearly (10% per 6 months). Amount = 20000 * (1.1)^2 = 24200. Interest = 4200. Year 2: 24200 at 20% compounded yearly. Amount = 24200 * 1.2 = 29040. Interest = 29040 - 24200 = 4840. Total interest = 4200 + 4840 = 9040.

AI explanation

For the first year compounded half yearly, the amount is 20000 * (1 + 10/100)^2, which equals Rs. 24200. For the second year compounded yearly at 20%, the amount is 24200 * (1 + 20/100), which equals Rs. 29040. The total interest earned is 29040 - 20000, resulting in Rs. 9040.

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