Question

When a sum of money is invested for 3 years at the same rate then maximum interest is earned if invested by ______.

पर्याय

• Simple interest

• Yearly compound interest

• Half yearly C.I.

• All of the above

Answer 1

When a sum of money is invested for 3 years at the same rate then maximum interest is earned if invested by half yearly C.I..

Explanation:

Step 1: Compare SI and CI

1. Simple Interest (SI): Interest is calculated only on the principal, so total interest after 3 years = `SI = (P xx r xx t)/100`
2. Compound Interest (CI) annually: Interest is calculated on principal + interest earned in previous years, so it grows faster than SI.
3. Compound Interest half-yearly: Interest is calculated twice a year, effectively compounding more frequently. This earns more interest than yearly CI for the same principal, rate and time.

Step 2: Rule of thumb

• More frequent compounding → more interest.
• Therefore, Half-yearly CI > Yearly CI > SI