Compound Interest Practice Test 1

Question : 5 of 40

Marks: +1, -0

The effective annual rate of interest corresponding to a nominal rate of 6% per annum payable half-yearly is:

Solution:

Let, P = Rs. 100; then

A=100(1+3/100)^2

=100×1.0609

= Rs. 106.09
Hence, C.I. = 106.09 – 100 = Rs. 6.09
So, required effective rate = 6.09% p.a.

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