What will be the amount on a sum of Rs. 24,000 at 30% per annum for 2 years, when the interest is compounded at every 8 months?
- AOption (a)
Rs. 41472
- BOption (b)
Rs. 41475
- COption (c)
Rs. 40472
- DOption (d)
Rs. 40475
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Correct answer
Rs. 41472
Why this answer is correct
Shortcut Trick
Rate for 8 months = (30% ÷ 12) × 8 = 20%.
Total periods in 2 years (24 months) = 24 ÷ 8 = 3 periods.
Using Ratio Method (20% = 1/5): Principal : Amount = 53 : 63 = 125 : 216.
125 units = Rs. 24,000 ⇒ 1 unit = 192.
Amount (216 units) = 216 × 192 = Rs. 41472.
∴ The correct answer is Rs. 41472.
Alternate Method
Given: Principal (P) = Rs. 24,000, Annual Rate (R) = 30%, Time (T) = 2 years.
Formula Used: Amount (A) = P(1 + r/100)n
⇒ Effective Rate for 8 months = (30 × 8) ÷ 12 = 20%
⇒ Number of periods (n) = (2 × 12) ÷ 8 = 3
⇒ A = 24000 × (1 + 20/100)3
⇒ A = 24000 × (1.2)3
⇒ A = 24000 × 1.728
⇒ A = 24 × 1728 = 41472
∴ The correct answer is Rs. 41472.
Additional Information
Effective Rate for Compounding
When interest is compounded quarterly (4 times a year), the rate becomes R/4 and time becomes 4T. For 8-month compounding, the factor is 8/12 of the annual rate.
Difference between SI and CI
The difference between CI and SI for 2 years is P(R/100)2 and for 3 years is P(R/100)2 × (3 + R/100).
Successive Percentage Formula
For two successive cycles of r%, the effective rate is [r + r + (r×r)/100]%. For three cycles of 20%, it is 72.8%.