compound: 70000(1+.10/2)^3 = 81033.75
simple: 70000(1+(.10/2)*3) = 80500
Karan took a loan of rs 70000 from a bank. If the rate of interest is 10%per annum find difference in amount he would be paying after 1.5 year if the interest is compound annually and compound half yearly
2 answers
oops. I misread. the problem.
The above rates are for 1/2 yearly accrual of interest.
For annual compounding, the amount is
70000(1+.10)^(3/2) = 80758.28
Actually, though, after a year and a half, the annual rate has only been applied once, so the amount in the account is only
70000(1+.10)^1 = 77000
The interest will not be applied till the end of the 2nd year.
The above rates are for 1/2 yearly accrual of interest.
For annual compounding, the amount is
70000(1+.10)^(3/2) = 80758.28
Actually, though, after a year and a half, the annual rate has only been applied once, so the amount in the account is only
70000(1+.10)^1 = 77000
The interest will not be applied till the end of the 2nd year.
0 answers