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Aptitude - Compound Interest - Discussion

Discussion Forum : Compound Interest - General Questions (Q.No. 4)
Compound Interest
4.
What is the difference between the compound interests on Rs. 5000 for 1 years at 4% per annum compounded yearly and half-yearly?
Rs. 2.04
Rs. 3.06
Rs. 4.80
Rs. 8.30
Answer: Option
Explanation:

C.I. when interest
compounded yearly    
= Rs. 5000 x 1 + 4 x 1 + x 4
100 100
= Rs. 5000 x 26 x 51
25 50
= Rs. 5304.

C.I. when interest is
compounded half-yearly
= Rs. 5000 x 1 + 2 3
100
= Rs. 5000 x 51 x 51 x 51
50 50 50
= Rs. 5306.04

Difference = Rs. (5306.04 - 5304) = Rs. 2.04

Discussion:
85 comments Page 4 of 9.
Preethu said:   8 years ago
What formula are they using for calculating C.I annually?
Praveen Kumar C said:   8 years ago
Actually, the correct answer is 3.06.
Sangeetha said:   8 years ago
Correct answer is 3.06.

When the interest is calculated annually, we cannot assume the interest for a half year to be 2%.
Hence C.I for 1.5 years should be calculated with n=3/2 and not R=r/2.

C.I (annually) - C.I (half-yearly) = 5306.04-5302.98 - 3.06.
Krishna said:   8 years ago
The right ans = 3.06.

I agree @Stephen.
Priya said:   9 years ago
@Rajjan.

How you got this? Please explain.
Rajjan khan said:   9 years ago
Best way.

Reffective for yearly = 6.08%,
Reffective for half yearly = 6.1208,
Difference = .0408%,

5000 *.0408/100 = 2.04.
Rajjan khan said:   9 years ago
Best way.

Reffective for yearly = 6.08%,
Reffective for half yearly = 6.1208,
Difference = .0408%,

5000 *.0408/100 = 2.04.
NEERAJ said:   9 years ago
Yes @Stephen.

I too think the option (b) is the answer.
Mahalakshmi said:   9 years ago
What is compound interest formula?

First describe it for me.
ASHRAF said:   9 years ago
@Saikumar.

Why 2% taken?
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