Question
The compound interest on a sum of ₹ 5,500 at 15% p.a.
for 2 years, when the interest is compounded 8 monthly, is:Solution
Time for compounded at every 8 months = 2 × (12/8) ⇒ Time for compounded at every 8 months = 3 units Rate of interest for compounded at every 8 months = 15 × (8/12) ⇒ Rate of interest for compounded 8 monthly = 10 units ⇒ C.I. = 5500[(1 + 10/100)3 - 1] ⇒ C.I. = 5500 [(11/10)3 − 1] ⇒ C.I. = 5500 [1331/1000 − 1] ⇒ C.I. = 5500 [(1331−1000)/1000] ⇒ C.I. = 5500 × (331/10) ⇒ C.I. = 1820.5 ∴ the compound interest earned is Rs. 1820.5
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