6 Arif took a loan of Rs 80,000 from a bank. If the rate of interest is 10% per annum, find the difference in amounts he would be paying after years if the interest is-
(i) compounded annually.
(ii) compounded half yearly.
Principal amount, P = Rs 80000
Rate of interest, R = 10% p.a.
Time period = years.
We know, Amount when interest is compounded annually, A =
Now, For the first year, A=
For the next half year, this will act as the principal amount.
Interest for 1/2 year at 10% p.a =
Required total amount = Rs (88000 + 4400) = Rs 92400
(ii) If it is compounded half yearly, then there are 3 half years in years.
n = 3 half years.
And, Rate of interest = half of 10% p.a = 5% half yearly
The difference in the two amounts = Rs (92610 - 92400) = Rs 210
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