Multiple choice

Find the C.I on Rs 20,000 at 10% rate of interest in 2 years if compounded half yearly. (Approximately)

  1. Rs. 4210

  2. Rs. 4310

  3. Rs. 4410

  4. Rs. 4510

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

For 2 years compounded half-yearly at 10% annual rate, the rate is 5% per half-year for 4 periods. The amount is 20000 * (1.05)^4 = 20000 * 1.21550625 = 24310.125. The compound interest is 24310.125 - 20000 = 4310.125, which is approximately 4310.

AI explanation

For half-yearly compounding, we divide the annual rate by two and multiply the years by two, yielding a new rate of 5% over 4 periods. The compound amount is calculated as 20000 times 1.05 to the power of 4, resulting in Rs. 24310.125. Subtracting the principal gives the compound interest of approximately Rs. 4310.

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