CA Foundation · Quantitative Aptitude · Mathematics of Finance
Find the compound interest on ₹10,000 for 1½ years at 20% per annum, compounded half-yearly.
The compound interest is ₹3,310. Half-yearly compounding at 20% a year means 10% per period for 3 periods. The amount is 10,000 × 1.331 = ₹13,310, and subtracting the principal leaves ₹3,310.
- A₹3,000
- B₹3,200
- C₹3,310Correct
- D₹3,600
Explanation
Rate per half-year is 10% and the number of periods is 3. Amount = 10,000 × (1.1)³ = 13,310, so CI = ₹3,310. Using annual compounding for one year and simple interest for the half-year gives ₹3,200, which is wrong.
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