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What is the difference between the compound interests on Rs. 5000 for 11⁄2 years at 4% per annum compounded yearly and half-yearly?

Correct Answer: Rs. 2.04

Explanation:

Compound Interest for 1 12 years when interest is compounded yearly = Rs.(5304 - 5000)



Amount after 112 years when interest is compounded half-yearly 
Compound Interest for 1 12 years when interest is compounded half-yearly = Rs.(5306.04 - 5000)



Difference in the compound interests = (5306.04 - 5000) - (5304 - 5000)= 5306.04 - 5304 = Rs. 2.04


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