Multiple choice

What would be the compound interest compounded half-yearly on Rs. 525 at a rate of 6% per annum for a time period of 6 months?

  1. Rs. 15.75

  2. Rs. 23

  3. Rs. 34.50

  4. Rs. 45.60

  5. Rs. 40
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A Correct answer
Explanation

For half-yearly compounding, rate = 6%/2 = 3% per half-year, and time = 6 months = 1 half-year. Interest = P * (r/100) = 525 * 0.03 = 15.75.

AI explanation

For half-yearly compounding, the new rate is 6/2 = 3% and the time is 1 half-year period. Applying the compound interest formula, CI = 525(1 + 3/100)^1 - 525, which yields 525 * 0.03 = 15.75. The compound interest incurred is Rs. 15.75.

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