Question
Download Solution PDFIf the 10 percent per annum rate of compound interest compounded yearly is equivalent to the rate of interest x percent per half-yearly when the compound interest is compounded half yearly, then what is the approximate value of x?
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFGiven:
Annual interest rate = 10%
Compounding frequency = half-yearly
Formula Used:
a + b +ab/100
Calculation:
x% is compounded half-yearly
a + b +ab/100 using this,
x + x + x2/100
2x + x2/100
According to the question:
10 = 2x + x2/100
1000 = x(200 + x)
x = 4.88 percent
Please note that this type of calculation is not possible in the exam, so it is better to use the option method after this.
Just put values from options.
Please note that here x is the rate of interest for half year, not per annum. Please go through the question carefully.
Last updated on Jun 26, 2025
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