Question
Anita and Rohan each invested a sum of ₹12,000 for 2.5
years at 20% compound interest per annum. However, while for Anita the interest was compounded annually, for Rohan it was compounded quarterly. How much more will Rohan receive as interest compared to Anita at the end of the 2.5 years?Solution
For Anita (compounded annually): A = ₹12,000 (1 + 20/100)2.5 = ₹12,000 × (6/5)2.5 = ₹20,953.92 Interest = A – P =20953.92-12000 = ₹8,953.92 For Rohan (compounded quarterly): Rate per quarter = 20 × 3/12 = 5% Time = 2.5 × 4 = 10 periods A = ₹12,000 (1 + 5/100)10 =12,000 × (21/20)10 = ₹21,331.02 Interest = A – P =21331.02-12000 = ₹9,331.02 Difference in interest = 9,331.02 - 8,953.92 = ₹377.10
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