Find the difference between the compound interest (compounded half-yearly) and the simple interest on ₹20,000 at 10% per annum for 1 year.

₹50Correct answerYour answer₹200Correct answerYour answer₹2,000Correct answerYour answer₹2,050Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer A

Correct answer: A

Half-yearly: 5% per half-year for 2 half-years. CI = $20000 \times (1.05)^2 - 20000 = 2050$ .
SI for 1 year = 10% of ₹20,000 = ₹2,000.
Difference = ₹2,050 − ₹2,000 = ₹50.

Worth noting

₹200 uses $P(R/100)^2$ with $R = 10$ . With half-yearly compounding the periods are half-years, so the shortcut uses $R = 5$ : $20{,}000 \times 0.05^2$ = ₹50.

Concept: CI − SI with half-yearly compounding
Typical timeTypical: 55 s
Your timeYours: —

The rule this testsDifference between SI and CI

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Ten questions from Simple & Compound Interest, at your own pace.

Find the difference between the compound interest (compounded half-yearly) and the simple interest on ₹20,000 at 10% per annum for 1 year.

Explanation