Question

Find the difference in the compound interest on ₹ 62500 for 1 1/2 years at 8% p.a compounded annually and when compounded half-yearly.

Answer 1

Case 1:

P = ₹ 62500

n = 1 1/2yrs. (a b/c) formula

r = 8% Compound annually

CI = A – P

CI = A – P = 70200 – 62500 = 7700 ……(1)

Case 2:

P = ₹ 62500

n = 112yrs.

r = 8% p.a when compound half yearly

r = 4% compound half yearly

= 70304 – 62500 = ₹ 7804

Difference between case 1 & case 2 is (2) – (1)

∴ (2) – (1) = 7804 – 7700 = ₹ 104