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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
Asked by Govind Last Modified
Answer (i) P = Rs 80,000
R = 10% per annum
n =
years
The amount for 1 year and 6 months can be calculated by first calculating the amount for 1 year using the compound interest formula, and then calculating the simple interest for 6 months on the amount obtained at the end of 1 year.
Firstly, the amount for 1 year has to be calculated.
By taking Rs 88,000 as principal, the SI for the next 
year will be calculated.
Interest for the first year = Rs 88000 − Rs 80000 = Rs 8,000
And interest for the nextyear = Rs 4,400
Total C.I. = Rs 8000 + Rs 4,400 = Rs 1,2400
A = P + C.I. = Rs (80000 + 12400) = Rs 92,400
(ii) The interest is compounded half yearly.
Rate = 10% per annum = 5% per half year
There will be three half years inyears.
Difference between the amounts = Rs 92,610 − Rs 92,400 = Rs 210
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