The difference between the compound interest on a sum of ₹ 8,000 for 1 year at the rate of 10% per annum, interest compounded yearly and half yearly is:
Answer & explanation
Correct answer: option 1
The formula used here is,
Difference in the simple interest and compound interest on a certain sum at R% per annum in 2 years = (CI - SI) = $\frac{PR^2}{100^2}$
⇒ Difference in the simple interest and compound interest on a certain sum at 10% per annum in 1 years compounded half yearly = x
So, actual rate = 5%
⇒ x = $\frac{8000 ×5^2}{100^2}$
⇒ x = \(\frac{8000}{400}\)
⇒ x = 20
Thus, the sum is Rs 20