An automobile financier claims to be lending | vedclass

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(B) Let the principal amount be $₹ 100$.Since the interest is calculated every six months,the rate for each six-month period is $10 \% / 2 = 5 \%$.Ste

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$10.25$

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(B) Let the principal amount be $₹ 100$.Since the interest is calculated every six months,the rate for each six-month period is $10 \% / 2 = 5 \%$.Step $1$: Interest for the first $6$ months $= 100 	imes (5/100) = ₹ 5$.Amount at the end of $6$ months $= 100 + 5 = ₹ 105$.Step $2$: For the next $6$ months,the principal becomes $₹ 105$.Interest for the second $6$ months $= 105 	imes (5/100) = ₹ 5.25$.Amount at the end of $12$ months $= 105 + 5.25 = ₹ 110.25$.Step $3$: The effective interest earned over one year is $110.25 - 100 = 10.25$.Therefore,the effective rate of interest is $10.25 \%$.

An automobile financier claims to be lending money at simple interest,but he includes the interest every six months for calculating the principal. If he is charging an interest of $10 \%$ per annum,the effective rate of interest becomes (in $\%$):

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