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Explanation:

Time = 2 years, Rate = 10 %

Case 1: When interest compounded annually

2 years CI Rate %

10+10 10×10\100=21 %

2 years SI Rate % = 10+10 = 20 %

According to the question.

(21−20) % of sum = Rs.28

Sum =28\1×100 = Rs. 2800

Case 2: When interest is compounded half-yearly

Rate %=10\2=5 %

Time = 2×2 = 4

Effective Rate % of CI for 2 half yearly

=5+5+5×5\100= 10.25%

Effective Rate % of CI for 4 half year

=10.25+10.25+ 10.25×10.25\100

= 20.50 + 1.050625 = 21.55 %

Effective Rate % of SI for 4 years

= 5×4 = 20 %

Difference in Rate % = (21.55−20) = 1.55%

Required difference

=1.55\100×2800=43.4

Hence Required difference=Rs.43.4