RRB NTPC · Question 75
On a certain Principal, simple interest amounts to Rs, 1000 in 1 year at a rate of 10% p.a. What will be the Effective rate of compound interest if the same is compounded on a half-yearly basis? A. 10.10 B. 10.15 C.10.20 D. 10.25
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Answer: (A) D
Explanation
Compounded half-yearly at 10% p.a., the rate is 5% per half-year for 2 half-years. Amount factor = (1.05)² = 1.1025, so interest = 10.25% of the principal per year. The effective annual rate is 10.25%.