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Find the compound interest on Rs. 42000 for 1121\frac{1}{2} years at 10% p.a. compounded annually.

Solution

Correct Option: 3

When compounded annually but period is a fraction, use compound for the whole year and simple for the fraction. After 1 year: 42000×1.1=4620042000 \times 1.1 = 46200. For the next half year at simple interest: 46200×0.10×0.5=231046200 \times 0.10 \times 0.5 = 2310. Amount = 46200+2310=4851046200 + 2310 = 48510. CI = 4851042000=651048510 - 42000 = 6510.

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