A money-lender claims he lends money at a simple rate of interest of 8% per annum. But he cleverly includes the interest amount in the principal when he calculates it every six months. The effective rate of interest becomes:

Correct option is A

simple rate of interest of = 8% per annum.
But he cleverly includes the interest amount in the principal when he calculates it every six months.
He calculated interest half yearly.
So the rate of interest is 8/2 = 4%
Now for one year the effective rate of interest will be,
4 + 4 + (4 × 4 /100) = 8.16%