Multiple choice

A principle of Rs. 18000 is deposited in a bank for two years which gives 20% rate of interest per annum compounded annually. If the given interest compounded half yearly then interest would have been how many percent more than its present interest.

  1. 5.4%

  2. 11.23%

  3. 9.45%

  4. 12.03%

  5. 7.45%
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Principal = Rs. 18000, Rate = 20% p.a., Time = 2 years. Annual compounding: Amount = 18000 × (1.2)² = 18000 × 1.44 = 25920. Interest = 25920 - 18000 = 7920. Half-yearly compounding: Rate per half-year = 10%, Periods = 4. Amount = 18000 × (1.1)⁴ = 18000 × 1.4641 = 26353.8. Interest = 26353.8 - 18000 = 8353.8. Difference = 8353.8 - 7920 = 433.8. Percentage more = (433.8/7920) × 100 ≈ 5.4%. Option A is correct.

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