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    Question

    Vikas invested Rs. 12,000 at an annual compound

    interest rate of 30%, with the interest being compounded annually after every 10 months. What is the interest Vikas will earn after 20 months?
    A Rs. 5,670 Correct Answer Incorrect Answer
    B Rs. 9,500 Correct Answer Incorrect Answer
    C Rs. 6,750 Correct Answer Incorrect Answer
    D Rs. 7,250 Correct Answer Incorrect Answer

    Solution

    Effective time period = 20 ÷ 10 = 2 terms Effective rate of interest = 30 X (10/12) = 25% So, compound interest received = 12000 X {1 + (25/100)}2 - 12000 = 12000 X 1.252 - 12000 = Rs. 6,750

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