Aptitude | Compound Interest | Question 3

Ram invests Rs. 10,000 for 1 year at a rate of 10% per annum compounded yearly and Sita invests the same amount for same time at same rate per annum compounded half yearly. What is the difference between the interests earned by both?
(A) Rs. 25.50
(B) Rs. 25
(C) Rs.20.50
(D) Rs.23.75


Answer: (B)

Explanation: For Ram:
Amount = 10000.[1 + 10/100]1 = Rs.10000 x 11/10 = Rs.11000

For Sita:
Amount= Rs. 10000.[1 +(10/2)/100]2 = 10000 x (21/20)2 = Rs.11025
Difference = Rs.(11000-11025) = Rs.25

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