Multiple choice

What is the compound interest (in Rs.) for 1 year on a sum of Rs. 20,000 at the rate of 40% per annum compounded half-yearly?

  1. 8000

  2. 8650

  3. 8750

  4. 8800
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Principal = 20000, Rate = 40% per annum, compounded half-yearly (20% per 6 months). Time = 1 year (2 periods). Amount = 20000 * (1 + 0.2)^2 = 20000 * 1.44 = 28800. Interest = 28800 - 20000 = 8800.

AI explanation

For compound interest compounded half-yearly, the rate becomes 20% per half-year and the time period becomes 2 half-years. Using the compound interest formula, the amount is 20000 * (1 + 20/100)^2, which equals 20000 * 1.44 = 28800. Subtracting the principal of 20000 from this amount gives a compound interest of Rs. 8800.

Keep practicing — related questions