Consider the compound interest of the following
(A) The compound interest on Rs. 30500 at 15% per annum for 2 years. (compounded annually) is: Rs. 9836.25
(B) The compound interest of Rs. 5000 at 20% per annum for one year is compounded (half-yearly) is: Rs. 6050.
Which of the following statements is/are correct?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Only (A)
Statement (A):
Principal = 30,500
Rate = 15 percent per annum
Time = 2 years
Amount = 30,500 × (1 + 15/100)²
= 30,500 × (1.15)²
= 30,500 × 1.3225
= 40,336.25
Compound Interest = 40,336.25 − 30,500
= 9,836.25
Correct.
Statement (B):
Principal = 5,000
Rate = 20 percent per annum
Time = 1 year, compounded half-yearly
Rate per half-year = 10 percent
Number of periods = 2
Amount = 5,000 × (1 + 10/100)²
= 5,000 × (1.1)²
= 5,000 × 1.21
= 6,050
Compound Interest = 6,050 − 5,000
= 1,050
The given value mentions Rs. 6050 as compound interest, but 6,050 is the amount, not the interest.
Incorrect.