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How much more would Rs.20000 fetch, after two years, if it is put at 20% p.a. compound interest payable half yearly than if is put at 20% p.a. compound interest payable yearly?

Correct answer: A. Rs.482

  • A. Rs.482
  • B. Rs.424
  • C. Rs.842
  • D. Rs.512

Explanation

With half-yearly compounding, Amount = Rs.20000 x 1.10⁴ = Rs.29282, while yearly compounding gives Rs.20000 x 1.20² = Rs.28800. The difference is Rs.29282 - Rs.28800 = Rs.482. Students may choose Rs.424 by using an incorrect number of half-yearly periods or by calculating the interest difference inaccurately.

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