Multiple Choice Questions

Rs15 000 is lent for one year at the rate of 20 per annum the interest being compounded annually If ...........

Quantitative Aptitude (MTS) Compound Interest

Rs15,000 is lent for one year at the rate of 20% per annum, the interest being compounded annually. If the compounding of the

interest is done half - yearly, then how much more interest will be obtained at the end of the one-year period on the same initial

sum?

This questions was previously asked in

SSC MTS 19th July 2022 Shift-1

Rs250

Rs200

Rs150

Rs180

- When interest is compounded annually:

- Principal (P) = Rs15,000

- Rate (R) = 20%

- Time (T) = 1 year

- Compound interest = P(1 + R/100)^T - P = 15000(1 + 0.2)^1 - 15000 = Rs3,000

- When interest is compounded half-yearly:

- The rate per period = 20%/2 = 10%

- Number of compounding periods = 2

- Compound interest = P(1 + R/200)^T - P = 15000(1 + 0.1)^2 - 15000 = Rs3,150

- Difference in interest: Rs3,150 - Rs3,000 = Rs150

- Thus, the additional interest with half-yearly compounding is Rs150.

- Option 3: Rs150 is the correct choice.

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