Multiple choice

The compound interest on Rs. 100 at the rate of 10% per annum, interest compounded half yearly, after one year is __________.

  1. Rs. 10

  2. Rs. 11

  3. Rs. 10.50

  4. Rs. 10.25
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Principal = 100, Rate = 10% per annum, compounded half-yearly (5% per half-year). For 1 year (2 periods), Amount = 100 * (1 + 0.05)^2 = 100 * 1.1025 = 110.25. Compound Interest = 110.25 - 100 = 10.25.

AI explanation

Using the formula for compound amount A = P(1 + (r/2)/100)^(2n) with a new rate of 5 per cent per half-year, the amount after one year is 100 * (1 + 5/100)^2. This evaluates to 100 * (21/20)^2, which equals 100 * (441/400) for a total amount of 110.25. The compound interest is the total amount minus the principal, so 110.25 - 100 = 10.25.

Keep practicing — related questions