Find the difference between CI and SI on ₹28,000, at 20% per annum, compounded half-yearly for 1 year.

Correct option is C

Given:
Principal (P) = ₹28,000
Rate of interest (R) = 20% per annum → 10 % half yearly
Time (T) = 1 year → 2 half yearly
Interest is compounded half-yearly.
Formula Used:

Simple Interest = $$\frac{P\times R \times T}{100}$$  

Effective Rate% = $$\left(A + B + \frac{AB}{100}\right)\%$$​​

Solution:

Simple Interest = $$\frac{28000\times 10 \times 2}{100}$$ 

SI = 5600

Compound Interest => Effective Rate% = $$\left(10 + 10 + \frac{100}{100}\right)\%$$

​​Effective Rate % = (20 + 1) % = 21%

Compound Interest = $$\frac{28000}{100\%} \times 21\%$$ 

Compound Interest = 5880

Difference = CI - SI = 5880 - 5600

Difference = 280 Rs.

Thus, the correct option is (c) ₹280

Alternate Method:

Effective SI Rate % = 20%

Effective CI Rate % = 21%

Difference = 21% - 20% = 1% of the principle

Difference in CI and SI = $$\frac{28000}{100\%} \times 1\%$$ = ₹280​