arithmetic - 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 the effective rate of interest becomes - skillgun

Let the sum be Rs. 100.
S.I. for first 6 months = Rs.(100×10×1/100×2)
= Rs. 5.
S.I. for last 6 months = Rs.(105×10×1/100×2)
= Rs. 5.25.
So,amount at the end of 1 year = Rs.(100 + 5 + 5.25)= Rs.110.25
Effective rate(110.25-100)
= 10.25%.