Find the effective annual rate of interest corresponding to a nominal rate of 6% p.a. compounded half-yearly.
Options:
6.03%
6.05%
0.07%
6.09%
Let Principal P = 100, Rate = R, n = 1
When compounded half-yearly,
A = P (1 + (R/2)/100)2n = 100 (1 + 3/100)2 = 106.09
Effective Rate = (A - P)% = 6.09%
Find the rate of interest per annum if a sum of money invested at compound interest amount to $800 and $840 in 3 and 4 years respectively.
5%
6%
7.25%
8%
SI on $800 for 1 year = 840 - 800 = $40
Rate = (100 x SI) / (P x T) = (100 x 40) / (800 x 1)
If a sum of money invested at compound interest doubles itself in 5 years then, in how many years will it become 8 times at the same rate of interest?
11 years
13 years
15 years
17 years
1st part:
P(1 + R/100)5 = 2P
or, (1 + R/100)5 = 2 ... (i)
2nd part:
P(1 + R/100)n = 8P
or, (1 + R/100)n = 8or, (1 + R/100)n = 23or, (1 + R/100)n = {(1 + R/100)5}3 ... using (i)
Find the least number of complete years in which a sum of money put out at 20% compound interest will be more than double.
3 years
4 years
5 years
6 years
P(1 + 20/100)n > 2P
Monty borrowed a sum of money from a bank and paid it back in two annual installments of Rs. 882 each allowing 5% compound interest. What was the sum borrowed?
1640
1650
1660
1670
Present worth of Rs. 882 due 1 year hence= P/(1 + R/100)= 882/(1 + 5/100) ... (i)
Present worth of Rs. 882 due 2 years hence= P/(1 + R/100)2= 882/(1 + 5/100)2 ... (ii)
Sum borrowed = (i) + (ii) = 1640