Question

A principal sum of money is lent out at compound interest compounded annually at the rate of 20% per annum for 2 years. It would give Rs 2410 more if the interest is compounded half-yearly. The principal sum is :

(a) Rs 1,00,000

(b) Rs 20,000

(c) Rs 10,000

(d) Rs 1,10,000

Answer 1

Correct option is (a) Rs 1,00,000

Let the principal sum be Rs. x 

Then Amount (at interest compounded annually)

\(= x\left(1 + \frac{20}{100}\right)^2 \)

\(= \frac{36x}{25}\)

Amount (at interest compounded half yearly)