Aptitude - Compound Interest - Discussion
Discussion Forum : Compound Interest - General Questions (Q.No. 10)
10.
The effective annual rate of interest corresponding to a nominal rate of 6% per annum payable half-yearly is:
Answer: Option
Explanation:
| Amount of Rs. 100 for 1 year when compounded half-yearly |
 |
= Rs. |  |
100 x |  |
1 + | 3 |  |
2 |  |
= Rs. 106.09 |
| 100 |
Effective rate = (106.09 - 100)% = 6.09%
Discussion:
43 comments Page 4 of 5.
Xyz said:
1 decade ago
@Arun.
For half yearly, is in't the formula:
C.I=(P(1+(r/2)/100)^2n-P)? where n=1/2. why have you missed n in the formula? Please explain.
For half yearly, is in't the formula:
C.I=(P(1+(r/2)/100)^2n-P)? where n=1/2. why have you missed n in the formula? Please explain.
RASHMI PODDAR said:
1 decade ago
@Sathya can you please explain me.
What will be the value of n according to this question in the following formula?
Effective rate = ((1+i/n)^n)-1.
What will be the value of n according to this question in the following formula?
Effective rate = ((1+i/n)^n)-1.
Gaurav said:
1 decade ago
Effective rate is actual rate for full year corresponding to rate for a year half yearly.
Eg. Rs.100 A = 100(1+6/100) = 106 for full year.
A = 100(1+3/100)^2 = 106.09 for a year half yearly. So effective rate is 106.09 = 100(1+R/100) is equal to 6.09. That's it.
Eg. Rs.100 A = 100(1+6/100) = 106 for full year.
A = 100(1+3/100)^2 = 106.09 for a year half yearly. So effective rate is 106.09 = 100(1+R/100) is equal to 6.09. That's it.
Boo said:
9 years ago
Why n=2?
For half yearly n should be 1/2.
For half yearly n should be 1/2.
Pavitra said:
1 decade ago
How could it be possible?
106.09-106 = 6.09?
106.09-106 = 6.09?
Siva said:
1 decade ago
@Pavitra.
It is "106.09-100 = 6.09"
It is "106.09-100 = 6.09"
Siva said:
9 years ago
As per formula "n" account for compounding period which is taken in years.
But when we count for the half year we get 2 periods in a year. So, we just multiply no. of years (n) with 2 in original formula to obtain the exact compounding periods.
How ever the rate of interest are (R.P.A) will be reduced to half in considered for half year.
Hope you understood!
But when we count for the half year we get 2 periods in a year. So, we just multiply no. of years (n) with 2 in original formula to obtain the exact compounding periods.
How ever the rate of interest are (R.P.A) will be reduced to half in considered for half year.
Hope you understood!
Durga said:
9 years ago
How could it possible?
106.09 - 106 = 6.09.
106.09 - 106 = 6.09.
Hrishi said:
9 years ago
Still not understand why n=2 is taken? Someone, please explain briefly.
Surya said:
9 years ago
Thanks @Dhairya.
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