What is the difference between the compound interests on Rs. 5000 for 1 years at

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Question

What is the difference between the compound interests on Rs. 5000 for 1 years at 4% per annum compounded yearly and half-yearly?

Options:

A . Rs. 2.04

B . Rs. 3.06

C . Rs. 4.80

D . Rs. 8.30

Answer: Option A

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

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