Multiple choice

A man invested Rs.20000 with rate of interest 20% per annum. The interest was compounded half yearly for the first year and next year it was compounded yearly. What is the total interest earned in 2 years?

  1. Rs.9050

  2. Rs.9060

  3. Rs.9070

  4. Rs.9040

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

Year 1: Half-yearly compounding at 20% annual rate = 10% per half-year. Amount after 1 year = 20000 × 1.10 × 1.10 = Rs. 24200. Year 2: Yearly compounding at 20%. Final amount = 24200 × 1.20 = Rs. 29040. Total interest = 29040 - 20000 = Rs. 9040. Option D is correct.

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