₹4,000 is given at 5% per annum for one year and interest is compounded half yearly. ₹2,000 is given at 40% per annum compounded quarterly for 1 year. The total interest received is nearest to:
Answer & explanation
Correct answer: option 3
In first case ,
Principal = 4000 , rate = 5% , time = 1 year and interest is compounded half yearly .
So, actual rate of interest = 2.5%
Amount = P$(1 \;+\; \frac{R}{100})^t$
Compound interest = Amount - Principal
= 4000 × \(\frac{102.5}{100}\) × \(\frac{102.5}{100}\) - 4000
= 202.5
In second case,
Principal = 2000 , rate = 20% , time = 1 year and interest is compounded quaterly .
So, actual rate of interest = 10%
Amount = P$(1 \;+\; \frac{R}{100})^t$
Compound interest = Amount - Principal
= 2000 × \(\frac{110}{100}\) × \(\frac{110}{100}\) × \(\frac{110}{100}\) × \(\frac{110}{100}\) - 2000
= 2982.2 - 2000
= 982.2
Total compound interest = 202.5 + 982.2
= Rs. 1130.70