An automobile financier claims to be lending money at S.I., but he includes the interest every six months for calculating the principal. If he is charging an interest of 20%, the effective rate of interest becomes?
Choose the correct choice from the following answers:
A) 40.5%	B) 20.5%	C) 10%	D) 30.5%	E) 50.5%
Let the sum be Rs. 100. Then,   S.I. for first 6 months = (100 * 20 *1) / (100 * 2) = Rs. 10   S.I. for last 6 months = (105 * 20 * 1) / (100 * 2) = Rs. 10.5   So, amount at the end of 1 year = (100 + 10+10.5) = Rs. 120.5   Effective rate = (120.5- 100)= 
<gadget id="calculator">(120.5- 100)</gadget>
<output>20.5</output>
20.5%.   ANSWER:20.5%
<result>B</result>
An automobile financier claims to be lending money at S.I., but he includes the interest every six months for calculating the principal. If he is charging an interest of 20%, the effective rate of interest becomes?