What is the difference (in Rs.) between the interest on Rs. 40,000 for one year at 12% per annum compounded half yearly and yearly?
Answer & explanation
Correct answer: option 2
Amount = 40,000
Interest = 12%
If we calculate yearly
Total interest = 12%
If we calculate half yearly
Total interest = 6% + 6% + \(\frac{6 × 6}{100}\)%
= 12.36%
Difference in interest = 12.36% - 12% = 0.36%
Difference in interest = 40000 × 0.36%
= 40000 × \(\frac{0.36}{100}\)
= 40000 × \(\frac{36}{10000}\)
= Rs.144