Multiple choice

A sum of Rs. 19600 is invested at 20% rate of interest at compound interest for 2 years compounded half yearly. Then at the end of 2 years compound interest will be how much more than simple interest?

  1. 1132.2

  2. 1236.56

  3. 1256.36

  4. 1444

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

Principal = Rs. 19600, Rate = 20%, Time = 2 years. Simple Interest = (P×R×T)/100 = (19600×20×2)/100 = Rs. 7840. For compound interest compounded half-yearly: New rate = 20/2 = 10% per half-year, Periods = 2×2 = 4. Amount = 19600(1+10/100)⁴ = 19600(1.1)⁴ = 19600×1.4641 = Rs. 28696.36. Compound Interest = 28696.36 - 19600 = Rs. 9096.36. Difference = 9096.36 - 7840 = Rs. 1256.36.

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