Multiple choice

A man deposited Rs.20000 in a bank for two years at 20% per annum. If the interest is compounded half-yearly during the first year and compounded annually during the second year then what is the total interest he will receive after two years.

  1. 8200

  2. 8800

  3. 9040

  4. 9000

  5. 9400
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

For the first year with half-yearly compounding at 20% per annum, the rate per half-year is 10%. Amount after first year = 20000 × (1.10)² = 20000 × 1.21 = Rs. 24200. For the second year with annual compounding at 20%, amount after second year = 24200 × 1.20 = Rs. 29040. Total interest = 29040 - 20000 = Rs. 9040.

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