Compound Interest

Quantitative Aptitude (CGL)

Title

45:30

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Indian Economy - Understanding the basics of Indian economic system

The compound interest on ?10,000 at 20% per annum is ?4,641. If the compounding is done half-yearly, then for how many years was the sum invested?

This questions was previously asked in

SSC CGL Tier II Paper 1 (26.10.2023)

- We are given principal = 10,000, rate = 20% per annum compounded half-yearly, and compound interest = 4,641.

- For half-yearly compounding: rate per half-year = 10%, frequency = 2n (where n = number of years).

- Amount = Principal × (1 + 10/100)^(2n)

- So, Amount = 10,000 × (1.1)^(2n)

- Compound Interest = Amount - Principal = 4,641 ? Amount = 14,641

- Therefore, 10,000 × (1.1)^(2n) = 14,641 ? (1.1)^(2n) = 1.4641

- Observe that (1.1)^4 = 1.4641, so 2n = 4 ? n = 2 years

Option 4: 2 years is correct.