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:	Choose the correct choice from the following answers:
A) 10%
B) 10.25%
C) 10.5%
D) 11 %
E) None of these
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.((105 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 includes the interest every six months for calculating the principal. If he is charging an interest of 10%, the effective rate of interest becomes: