Multiple choice

Find the difference (in Rs) in the interest earned on Rs 10,00,000 at 10% in 1 year compounded annually and semi-annually.

  1. 250

  2. 1000

  3. 100

  4. 2500
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Annual: 10,00,000 * 0.1 = 100,000. Semi-annual: 10,00,000 * (1 + 0.05)^2 - 10,00,000 = 10,00,000 * (1.1025 - 1) = 102,500. Difference = 102,500 - 100,000 = 2500.

AI explanation

The compound interest compounded annually is 1000000 multiplied by 10 divided by 100, yielding Rs. 100000. When compounded semi-annually, the rate becomes 5 percent for two periods, making the interest amount 1000000 multiplied by 1.05 squared minus 1000000, which equals Rs. 102500. The difference between the semi-annual and annual interest is 102500 minus 100000, resulting in Rs. 2500.

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