Multiple choice

Arvinder deposited Rs. 8000 in the bank at 4% rate of interest per annum. What would be the difference between the compound interest on the sum for one and a half year compounded yearly and half-yearly?

  1. Rs. 3.26

  2. Rs. 5.40

  3. Rs. 5.45

  4. Rs. 6.01

  5. Rs. 6.25
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Yearly: 8000 * (1.04) * (1.02) = 8486.4. Half-yearly: 8000 * (1.02)^3 = 8000 * 1.061208 = 8489.664. Difference = 8489.664 - 8486.4 = 3.264.

AI explanation

For yearly compounding, the amount is 8000 multiplied by 1.04 and then by 1.02, which gives Rs. 8486.40, yielding an interest of Rs. 486.40. For half-yearly compounding, the rate becomes 2% per half year across three periods, making the amount 8000 multiplied by 1.02 cubed, which equals Rs. 8489.66 for an interest of Rs. 489.66. The difference between these two interest amounts is Rs. 489.66 minus Rs. 486.40, resulting in Rs. 3.26.

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