Compound Interest Practice Test 5

Question : 24 of 40

Marks: +1, -0

The effective rate of interest corresponding to a nominal rate of 8% p.a. payable half-yearly is:

Solution:

Let the sum of Rs 100 compounded half yearly

⇒100(1+8/200)^2

=100(1+1/25)^2

=100×26/25×26/25=108.16

So, effective rate is 8.16.

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