A 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%, the effective rate of interest becomes.

1. A 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%, the effective rate of interest becomes.

[EXIM Bank MTO-2013 : 2013]

1. 10%

2. 10.25%

3. 10.75%

4. 11%

5. None of these

Answer

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