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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 5 of 9.
Nikhil said:   5 years ago
We can do the same thing for both C.I.

We don't need to do extra stuff like 3/2 and all just try I got my answer correctly without using this method.
Gunjan Patidar said:   5 years ago
I too agree the answer is 3.06.
S.Naveen said:   6 years ago
I didn't understand this, please explain me.
Afsha said:   1 decade ago
Finding it tuff to understand can anyone please make it easy for me from first step.
Simran said:   1 decade ago
How to solve for year and a half when asked in a question please tell me now?
Divya said:   1 decade ago
Compound interest indicates interest on interest.

So we can calculate it as:
CI1 = 5000*(4/100)*1 = 200.
But I don't know to calculate, CI2 for 1/2 year.

Such that compound interest CI = CI1+CI2.
Sneh said:   1 decade ago
How we can compound half yearly means I did not understand how 3 can come means n=3 ?
Roop said:   1 decade ago
Why 1/2*4 instead of (1+4/100)^1/2 ?
Roop said:   1 decade ago
@Akshay and @Arslan.

When time is in fraction that is 3/2 then the formula is:
A = P[(1+R/100)*{1+(R/2)/100).
Akshay said:   1 decade ago
Why is is 1+[(1/2)*4/100] when it should be 1+(4/100)^1/2 when the interest is compounded annually.
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