Question

Meena took a loan of Rs 8000 at 20 percent per annum compound interest compounded semi annually. She repaid the loan after two years. Had she repaid the loan after a year, how much money she could have saved?
1. Rs. 3,505.5
2. Rs. 2,300.2
3. Rs. 2,800.8
4. Rs. 2,032.8

Answer 1

Correct Answer - Option 4 : Rs. 2,032.8

Given:

Principal is Rs. 8,000

Rate of interest is 20% half-yearly

Time is 2 years

Concept used:

In case of amount is compounded half yearly the rate of interest becomes half and time becomes double.

Formula used:

A = P(1 + r/100)ⁿ

Where,

P is Principle

r is Rate of interest

n is time in year

Calculation:

Rate of interest = 20/2

⇒ Rate of interest = 10%

Time = 4 half years

According to the first condition,

A₁ = 8,000(1 + 10/100)⁴

⇒ A1 = 8,000(11/10)⁴

⇒ A1 = 8,000 × 11/10 × 11/10 × 11/10 × 11/10

⇒ A1 = Rs. 1,1712.8

According to the second condition,

A₂ = 8,000( 1 + 10/100)²

⇒ A₂ = 8,000(11/10)²

⇒ A₂ = 8,000 × 11/10 × 11/10

⇒ A₂ = Rs. 9,680

According to the question,

A₁ - A₂ = 11,712.8 - 9,680

⇒ A1 - A₂ = Rs. 2,032.8 

∴ The difference is Rs. 2,032.8.