Multiple choice

Sara invested two equal sums of Rs. 8,000 each in two different bank funds for a period of 2 years. Fund A provides compound interest payable yearly at an interest rate of 10%, while Fund B provides compound interest payable half-yearly at the same interest rate of 10%. Determine the approximate difference between the amounts she will receive from the two investments at the end of 2 years.

  1. Rs. 30

  2. Rs. 40

  3. Rs. 44

  4. Rs. 48
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Fund A: 8000 * (1.1)^2 = 9680. Fund B: 8000 * (1 + 0.05)^4 = 8000 * 1.21550625 = 9724.05. Difference = 9724.05 - 9680 = 44.05.

AI explanation

For Fund A, the yearly compound interest amount is 8000 times the quantity 1 plus 10 divided by 100 close quantity squared, which equals 8000 times 1.21, or 9680. For Fund B, the half-yearly compound interest amount is 8000 times the quantity 1 plus 5 divided by 100 close quantity raised to the power of 4, which equals 8000 times 1.2155, or approximately 9724. The difference between the two amounts is 9724 minus 9680, which is Rs. 44.

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