Find the compound interest on Rs. 20000 at 20 percent per annum for 12 months, compounded half yearly.
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Answer (Detailed Solution Below)Option 3 : Rs. 4200 Free 10 Questions 10 Marks 10 Mins Given: Principal = Rs. 20000, Rate = 10 % per half-year, Time = 1 years = 2 half- years Formula: Amount = P (1 + (R/2)/100)2n Calculations: Amount = 20000 [1 + 10/100]2 Amount = Rs. 24,200 Compound Interest = Total amount – Principal ⇒ 24,200 – 20000 ⇒ Rs.4200 ∴ The required answer is Rs 4200. Last updated on Oct 25, 2022 The NCTE (National Council for Teacher Education) has released the detailed notification for the CTET (Central Teacher Eligibility Test) December 2022 cycle. The last date to apply is 24th November 2022. The CTET exam will be held between December 2022 and January 2023. The written exam will consist of Paper 1 (for Teachers of class 1-5) and Paper 2 (for Teachers of classes 6-8). Check out the CTET Selection Process here. Let's discuss the concepts related to Interest and Compound Interest. Explore more from Quantitative Aptitude here. Learn now! Find the compound interest (approx.) earned by Rs. 20000 at 12% per annum for 1 year compounded quarterly?
Answer (Detailed Solution Below)Option 2 : Rs. 2510 Given: Principal = Rs. 20000 Rate = 12% per annum compounded quarterly Time = 1 year Formula Used: C.I = P [(1 + R/100)n - 1] And, If rate is compounded quartely then Rate becomes R/4 and time becomes 4n Calculation: Let Principal amount P = Rs. 20000 Let Rate of interest r = 12% Number of years = 1 Now, Amount earned after 1 year, ⇒ 20000 × [1 + (12/4)/100]4 × 1 ⇒ 20000 × (1.03)4 ⇒ Rs. 22510 ∴ Interest earned = Rs. (22510 – 20000) = Rs. 2510 Stay updated with the Quantitative Aptitude questions & answers with Testbook. Know more about Interest and ace the concept of Compound Interest. Find the compound interest earned on Rs.20000 for 2 years at 10% p.a. the interest being compounded annually. Nội dung chính Show
ML Aggarwal Solutions Class 8 Mathematics Solutions for Simple and Compound Interest Exercise 8.2 in Chapter 8 - Simple and Compound InterestQuestion 7 Simple and Compound Interest Exercise 8.2 Calculate the difference between the compound interest and the simple interest on Rs 20000 in 2 years at 8% per annum. Answer: Principal (P) = Rs 20000 Rate (R) = 8% p.a. Period (T) = 2 years Hence, Simple interest (S.I.) = PRT / 100 = Rs (20000 × 8 × 2) / 100 We get, = Rs 3200 Now, Amount on compound interest A = P {1 + (R / 100)}n = RS 20000 {1 + (8 / 100)}2 On further calculation, We get, = Rs 20000 × (27 / 25) × (27 / 25) = Rs 32 × 729 = Rs 23328 Therefore, Compound interest = Final amount – (original) Principal = Rs 23328 – Rs 20000 We get, = Rs 3328 Hence, Difference in compound interest – simple interest = Rs 3328 – Rs 3200 = Rs 128 Was This helpful? What Is the Rule of 72?The Rule of 72 is a quick, useful formula that is popularly used to estimate the number of years required to double the invested money at a given annual rate of return. Alternatively, it can compute the annual rate of compounded return from an investment given how many years it will take to double the investment. While calculators and spreadsheet programs like Microsoft Excel have functions to accurately calculate the precise time required to double the invested money, the Rule of 72 comes in handy for mental calculations to quickly gauge an approximate value. For this reason, the Rule of 72 is often taught to beginning investors as it is easy to comprehend and calculate. The Security and Exchange Commission also cites the Rule of 72 in grade-level financial literacy resources. Key Takeaways
Rule of 72The Formula for the Rule of 72The Rule of 72 can be leveraged in two different ways to determine an expected doubling period or required rate of return. Years To Double: 72 / Expected Rate of Return To calculate the time period an investment will double, divide the integer 72 by the expected rate of return. The formula relies on a single average rate over the life of the investment. The findings hold true for fractional results, as all decimals represent an additional portion of a year. Expected Rate of Return: 72 / Years To Double To calculate the expected rate of interest, divide the integer 72 by the number of years required to double your investment. The number of years does not need to be a whole number; the formula can handle fractions or portions of a year. In addition, the resulting expected rate of return assumes compounding interest at that rate over the entire holding period of an investment. The Rule of 72 applies to cases of compound interest, not simple interest. Simple interest is determined by multiplying the daily interest rate by the principal amount and by the number of days that elapse between payments. Compound interest is calculated on both the initial principal and the accumulated interest of previous periods of a deposit. How to Use the Rule of 72The Rule of 72 could apply to anything that grows at a compounded rate, such as population, macroeconomic numbers, charges, or loans. If the gross domestic product (GDP) grows at 4% annually, the economy will be expected to double in 72 / 4% = 18 years. With regards to the fee that eats into investment gains, the Rule of 72 can be used to demonstrate the long-term effects of these costs. A mutual fund that charges 3% in annual expense fees will reduce the investment principal to half in around 24 years. A borrower who pays 12% interest on their credit card (or any other form of loan that is charging compound interest) will double the amount they owe in six years. The rule can also be used to find the amount of time it takes for money's value to halve due to inflation. If inflation is 6%, then a given purchasing power of the money will be worth half in around 12 years (72 / 6 = 12). If inflation decreases from 6% to 4%, an investment will be expected to lose half its value in 18 years, instead of 12 years. Additionally, the Rule of 72 can be applied across all kinds of durations provided the rate of return is compounded annually. If the interest per quarter is 4% (but interest is only compounded annually), then it will take (72 / 4) = 18 quarters or 4.5 years to double the principal. If the population of a nation increases at the rate of 1% per month, it will double in 72 months, or six years. Who Came Up With the Rule of 72?The Rule of 72 dates back to 1494 when Luca Pacioli referenced the rule in his comprehensive mathematics book called Summa de Arithmetica. Pacioli makes no derivation or explanation of why the rule may work, so some suspect the rule pre-dates Pacioli's novel. How Do You Calculate the Rule of 72?Here's how the Rule of 72 works. You take the number 72 and divide it by the investment's projected annual return. The result is the number of years, approximately, it'll take for your money to double. For example, if an investment scheme promises an 8% annual compounded rate of return, it will take approximately nine years (72 / 8 = 9) to double the invested money. Note that a compound annual return of 8% is plugged into this equation as 8, and not 0.08, giving a result of nine years (and not 900). If it takes nine years to double a $1,000 investment, then the investment will grow to $2,000 in year 9, $4,000 in year 18, $8,000 in year 27, and so on. How Accurate Is the Rule of 72?The Rule of 72 formula provides a reasonably accurate, but approximate, timeline—reflecting the fact that it's a simplification of a more complex logarithmic equation. To get the exact doubling time, you'd need to do the entire calculation. The precise formula for calculating the exact doubling time for an investment earning a compounded interest rate of r% per period is: To find out exactly how long it would take to double an investment that returns 8% annually, you would use the following equation: T = ln(2) / ln (1 + (8 / 100)) = 9.006 years As you can see, this result is very close to the approximate value obtained by (72 / 8) = 9 years. What Is the Difference Between the Rule of 72 and the Rule of 73?The rule of 72 primarily works with interest rates or rates of return that fall in the range of 6% and 10%. When dealing with rates outside this range, the rule can be adjusted by adding or subtracting 1 from 72 for every 3 points the interest rate diverges from the 8% threshold. For example, the rate of 11% annual compounding interest is 3 percentage points higher than 8%. Hence, adding 1 (for the 3 points higher than 8%) to 72 leads to using the rule of 73 for higher precision. For a 14% rate of return, it would be the rule of 74 (adding 2 for 6 percentage points higher), and for a 5% rate of return, it will mean reducing 1 (for 3 percentage points lower) to lead to the rule of 71. For example, say you have a very attractive investment offering a 22% rate of return. The basic rule of 72 says the initial investment will double in 3.27 years. However, since (22 – 8) is 14, and (14 ÷ 3) is 4.67 ≈ 5, the adjusted rule should use 72 + 5 = 77 for the numerator. This gives a value of 3.5 years, indicating that you'll have to wait an additional quarter to double your money compared to the result of 3.27 years obtained from the basic rule of 72. The period given by the logarithmic equation is 3.49, so the result obtained from the adjusted rule is more accurate. For daily or continuous compounding, using 69.3 in the numerator gives a more accurate result. Some people adjust this to 69 or 70 for the sake of easy calculations. What is the compound interest on 12000 rs at the rate of 10% for 2 years?Hence, the compound interest is Rs. 2,520. What will be the amount of 20000 after 2 years when the interest is compounded annually at the rate of 10% per annum also calculate the compound interest?4200. Was this answer helpful? What is the compound interest on 10000 for 2 years at 10% per annum?Compound Interest would be 12100rs. What is the compound interest on Rs 20000 in 2 years?4200. Hence the compound interest that I need to pay after two year will be equal to Rs 4200. What will be the compound interest on 20000 for 3 years at 10% per annum?Hence, the compound interest for three years will be Rs. 6,620.
What is the compound interest on rupees 20000 at 10% for 2 years?Where P is principal, R is rate of interest and T is time. ∴ The compound interest for 2 years is Rs. 2464.
What is the compound interest on $1000 at 10% per annum for 2 years compounded annually?Detailed Solution. ∴ The Interest Amount will be Rs. 210.
What will be the amount on 18000 for 2.5 years at 10% per annum compounded annually?Compound Interest (C.I) = A - P = ₹ 22,869 - ₹ 18,000 = ₹ 4,869. Rs. 18,000 for 212 year at 10% per annum compounded annually. Q.
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Find the compound interest on 20000 for 6 years at 10% per annum compounded annually
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