What is the difference between the compound interest on Rs.12000 at 20% p.a. fo

Question

What is the difference between the compound interest on Rs.12000 at 20% p.a. for one year when compounded yearly and half yearly?

Answer: Option B

When compounded annually, interest = 12000[1 + 20/100]¹ - 12000 = Rs.2400 When compounded semi-annually, interest = 12000[1 + 10/100]² - 12000 = Rs.2520 Required difference = 2520 - 2400 = Rs.120

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