sirish borrowed a sum of ₹163840 at 12.5% p.a. compounded annually.on the same day he lent out the same amount to zaid at the same rate but compounded half yearly .find his gain after 2 year

Question

This question is asked from compound interest

Answer 1

163840 compounded annually for 2 years at 12.5% is 163840*1.125^2=207360.

163840 compound semiannually for 2 years at 6.25% (half-year rate) is 163840*1.0625^4=208802.50.

Therefore the gain after 2 years is 208802.50-207360=1442.50.

(This can also be calculated thus: 163840(1.0625^4-1.125^2)=163840*0.0088804.)