Find the compound interest on Rs $2000$ at $5\%$ per annum for $2\frac12$ years, compounded yearly with the remaining half year treated separately.
Practice this question from Chapter Mock 5: Simple Interest and Compound Interest, with options and an explanation.
Question
Find the compound interest on Rs $2000$ at $5\%$ per annum for $2\frac12$ years, compounded yearly with the remaining half year treated separately.
Option A
Rs 210.125
Option B
Rs 235.125
Option C — Correct answer
Rs 260.125
Correct choice.
Option D
Rs 285.125
Explanation
Amount after 2 years $=2000\times1.05^2=2205$. For the next half year at simple growth on the current amount, multiply by $1.025$. Final amount $=2205\times1.025=2260.125$, so CI $=260.125$.