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Arif took a loan of 80,000 from a bank. If the rate of interest is 10% per annum, find the

difference in amounts he would be paying after 1
2 years, if the interest is compounded
annually and compounded half yearly.


(i) compounded annually.
Answer: Amount after 1 year=80000+80000 10%=80000+8000=88000
Interest for the next 6 months = 88000 x 5%=4400
Amount after 1.5 years = 88000+4400 = 92400
(ii) compounded half yearly.
Answer: The rate of interest will become half and time will be three half years.
Check the image for answer for (ii)
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