What is the difference in compound interest earned on Rs. 12,000 at an annual rate of 20% when compounded annually versus semi-annually for one year?

Explanation

Calculating compound interest for one year at 20% on Rs. 12,000: - When compounded annually: CI = 12,000 × (1 + 0.20)^1 - 12,000 = Rs. 2,400 - When compounded semi-annually: CI = 12,000 × (1 + 0.10)^2 - 12,000 = Rs. 2,520 The difference between the two compound interests is Rs. 2,520 - Rs. 2,400 = Rs. 120.