What is the difference between the compound interests on ₹ 1000 for 1 year at 10% per annum when compounded yearly and when compounded half yearly?
Answer & explanation
Correct answer: option 3
Amount = Principal × ( 1+ ( \(\frac{r}{ 100 }\) )n
Compound interest compounded annualy,
Interest Compounded annually= 1000 × ( 1+ ( \(\frac{10}{ 100 }\) )1 - 1 )
= 1000 × 0.1
= 100
Compound interest compounded half yearly,
Compound interest = 1000 × ( 1+ ( \(\frac{10}{ 200 }\) )2 - 1 )
= 1000 ×0.1025
= 102.5
Required difference = 102.5 - 100
= 2.5
The correct answer is Option (3) → ₹ 2.50