The effective annual rate of interest corresponding to C.I. at the rate of 16% per annum payable half yearly is:
Answer & explanation
Correct answer: option 2
Rate of interest half yearly = \(\frac{16}{2}\)% = 8%
Effective rate = x% +y% + \(\frac{xy}{100}\)%
= 8% + 8% + \(\frac{8×8}{100}\)% ⇒ 16% + \(\frac{64}{100}\)% = 16 + 0.64% = 16.64%