Aptitude Day 315

Problems on Compound Interest:

1. What’s the difference between the C.I. on 10,000 for 1(1/2) years at 5% p.a. compounded yearly and half-yearly?

Solution:

                 Difference = 10,000(1 + 5/2*100)^(2)3/2 - [ 10,000(1 + 5/100)¹ * (1 + ½(5)/100) ]

                 By simplifying the above one, we get

                                     = 10768.90 – 10762.5

                                     = 6.40625.

2. Find the C.I. on 1600 for 6 months at 8% p.a. compounded quarterly.

Solution:

                  n = 6 months

                     = 2 quarters.

                  Amount = 1600*(1 + 8/4*100)^(4)2/4

                                = 1600(51/50)²

                                = 1664.64.

                  C.I =1664.64 – 1600 

                        = 64.64.