Compound Int

Question

What is the difference between the compound interests on Rs. 5000 for 1 years at 4% per annum compounded yearly and half-yearly?

Is $5000*(1+4/100)^{1.5} - 5000$ wrong for calculating CI yearly?

Answer 1

Is 5000∗(1+4/100)1.5−5000 wrong for calculating CI yearly?

A –  P = C.I .                      A =P(1+r/100)**nt        ** = power of

In above case , nt = 1.5   means year and half                                         5000∗(1+4/100)**1.5−5000

[5000∗(1+4/100)**1−5000]  – [5000∗(1+4/100)**0.5−5000]

Answer 2

Compounded Annually
Interest = 5000[(1+4/100)$^{1}$ – 1] = 200

Compounded Half-Yearly
Interest = 5000[(1+ (4/2)/100)$^{2}$ – 1] = 202

Difference = 2