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      Question

      Anita and Rohan each invested a sum of ₹12,000 for 2.5

      years at 20% compound interest per annum. However, while for Anita the interest was compounded annually, for Rohan it was compounded quarterly. How much more will Rohan receive as interest compared to Anita at the end of the 2.5 years?
      A ₹372 Correct Answer Incorrect Answer
      B ₹385 Correct Answer Incorrect Answer
      C ₹360 Correct Answer Incorrect Answer
      D ₹377 Correct Answer Incorrect Answer

      Solution

      For Anita (compounded annually):   A = ₹12,000 (1 + 20/100)2.5 = ₹12,000 × (6/5)2.5 = ₹20,953.92   Interest = A – P =20953.92-12000 = ₹8,953.92   For Rohan (compounded quarterly):   Rate per quarter = 20 × 3/12 = 5%     Time = 2.5 × 4 = 10 periods     A = ₹12,000 (1 + 5/100)10   =12,000 × (21/20)10   = ₹21,331.02     Interest = A – P =21331.02-12000 = ₹9,331.02   Difference in interest = 9,331.02 - 8,953.92 = ₹377.10

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