Discussion
A sum amounts to ₹ 22627 at 10 % p.a. in 3 years, interest compounded annually. What will be the compound interest on the same sum at double the rate in one year, if interest is compounded half-yearly?
Answer: B
The compound interest is 3570 rupees. First find the sum: at 10 % for 3 years compounded annually the factor is 1.331, so \[P = \frac{22627}{1.331} = 17000\] At double the rate, 20 % per annum, compounded half-yearly for one year means 10 % per half-year for 2 periods, a factor of 1.21: \[A = 17000 \times 1.21 = 20570\] Compound interest = 20570 - 17000 = 3570. The options 3360, 3780 and 3400 do not match this calculation.
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