What is the additional amount earned on Rs. 20,000 after two years when invested at 20% per annum compound interest compounded semi-annually compared to the same interest rate compounded annually?

Explanation

The amount with semi-annual compounding is 20000 × (1 + 0.20/2)^(2×2) = 20000 × (1.10)^4. The amount with annual compounding is 20000 × (1 + 0.20)^2 = 20000 × (1.20)^2. The difference is 20000 × (1.10)^4 - 20000 × (1.20)^2 = Rs. 482.