A bank offers an interest of 6% per annum which is calculated at the end of the year. Another bank offers 10% interest per annum which is calculated and added every six months. What is the difference in the interest on a deposit of 1000?

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Detailed Solution

Interest at 6% per annum $= \frac{1000 \times 6 \times 1}{100} = ₹ 60$ Interest, when it is calculated every six months

$= \frac{1000 \times 5 \times 2}{100} = ₹ 100$
Required difference $= 100 - 60 = ₹ 40$

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