The difference of compound interest on Rs.800 for 1 year at 20% per annum when compound half yearly and quarterly is?

Q: The difference of compound interest on Rs.800 for 1 year at 20% per annum when compound half yearly and quarterly is?

C.I. when reckoned half yearly = Rs.[800 x (1 + 10/100)2 - 800] = Rs. 168 C.I.when reckoned quarterly = Rs.800[(1 + 5/100)4 - 1] = 800[(194481 - 160000)/160000] = 34481/200 = Rs.172.40 ∵ Required difference =Rs.(172.40 - 168) = Rs.4.40

Nil
Rs. 2.50
Rs. 4.40
Rs. 6.60

Correct Answer: Rs. 4.40

Explanation:

C.I. when reckoned half yearly
= Rs.[800 x (1 + 10/100)² - 800]
= Rs. 168
C.I.when reckoned quarterly
= Rs.800[(1 + 5/100)⁴ - 1]
= 800[(194481 - 160000)/160000]
= 34481/200
= Rs.172.40
∵ Required difference =Rs.(172.40 - 168)
= Rs.4.40

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