Multiple choice

What is the compound interest on a sum of Rs. 20,000 invested in a bank at 15%, compounded annually, for a time period of two years and six months?

  1. Rs. 9230.50

  2. Rs. 9950.50

  3. Rs. 8005.20

  4. Rs. 8433.75

  5. Rs. 9080
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

For 2 years, the amount is 20000 * (1 + 0.15)^2 = 20000 * 1.3225 = 26450. For the remaining 6 months (0.5 years), the interest is calculated on 26450 at 15% simple interest: 26450 * 0.15 * 0.5 = 1983.75. Total amount = 26450 + 1983.75 = 28433.75. Compound interest = 28433.75 - 20000 = 8433.75.

AI explanation

For a fractional period of two years and six months at 15%, calculate the compound interest for two full years plus simple interest for half a year on the new amount. The amount after two years is 20000 times 1.15 squared, which equals 26450. The simple interest for the next half year is 26450 times 15 times 0.5 divided by 100, yielding Rs. 1983.75. Adding the interest from the first two years, which is 6450, to the half-year interest gives a total compound interest of Rs. 8433.75.

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