An automobile financier claims to be lending money at simple interest, but he includesthe interest every six months for calculating the principal. If he is charging an interest of10%, the effective rate of interest becomes: Choose the correct choice from the following options.
A) 10%  B) 10.25%  C) 10.5%  D) none of these  E) Cannot be determined
Explanation:   Let the sum be Rs. 100. Then,   S.I. for first 6 months = Rs.[ (100 x 10 x 1)/(100 x 2) ]= Rs.5   S.I. for last 6 months =Rs.[(102 x 10 x 1)/(100 x 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)= 
<gadget id="calculator">(110.25 - 100)</gadget>
<output>10.25</output>
10.25%   Answer: 10.25%
<result>B</result>
An automobile financier claims to be lending money at simple interest, but he includesthe interest every six months for calculating the principal. If he is charging an interest of10%, the effective rate of interest becomes: