Multiple choice

Simple interest on a sum of money for 1 year at 12% per annum is Rs. 1200. What will be the compound interest when compounded half-yearly on that sum at the same rate for the same period?

  1. Rs. 1236

  2. Rs. 1326

  3. Rs. 11,236

  4. Rs. 13,260
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

SI = 1200 for 1 year at 12% means Principal = 1200 / 0.12 = 10000. For compound interest half-yearly at 12% per annum (6% per half-year) for 1 year (2 periods): CI = 10000 * (1.06)^2 - 10000 = 10000 * 1.1236 - 10000 = 1236.

AI explanation

First, find the principal using the simple interest formula P = (SI * 100) / (R * T), which gives P = (1200 * 100) / (12 * 1) = Rs. 10,000. For half-yearly compound interest, the rate becomes 6% per half-year and the time becomes 2 half-years. The compound interest is 10000 * (1.06)^2 - 10000 = 11236 - 10000 = Rs. 1236.

Keep practicing — related questions