The difference between the compound and the simple interest on a sum for 2 years at 10 percent per annum, when the interest is compounded annually, is Rs.28. If the interest were compounded half yearly the difference in two interests will be?

A. Rs. 44

B. Rs. 28.35

C. Rs. 43.41

D. Rs. 43.29

Answer: Option C

Solution(By Examveda Team)

Compounded annually so first year interest is same
Difference of interest in 2nd year = 28
Rate of interest = 10%
Interest received in 1st year 28/10% = 280
Therefore Principal = 280/10% = 2800
In two year Simple interest = 280 + 280 = 560
in two year compounded half year = 2800 x (1.05)^{4 = 603.41
Difference in two = 603.41 - 560 = Rs. 43.41}