Multiple choice

What is the difference between the compound interest on Rs. 5000 for 3/2 years at 4% per annum compounded yearly and half yearly?

  1. Rs. 2.04

  2. Rs. 3.06

  3. Rs. 4.80

  4. Rs. 8.30
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Yearly: 5000 * (1.04) * (1 + 0.04 * 0.5) = 5000 * 1.04 * 1.02 = 5304. Half-yearly: 5000 * (1 + 0.02)^3 = 5000 * 1.061208 = 5306.04. Difference = 5306.04 - 5304 = 2.04.

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