Question

15.
Calculate compound interest on 1000 over a period of 1 year at 10% per annum, if
interest is compounded quarterly?
​

Answer 1

Step-by-step explanation:

To calculate compound interest,

First use the following formula to calculate the amount

a= p(1 + \frac{r}{n} )^{nt}a=p(1+

n

r

)

nt

Then subtract principal from amount to get the compound interest.

Here,

P = 1000

rate, r = 10%

time, t = 1 year

it is compounded quarterly,

thus n = 1 ÷ 0.25 = 4

\begin{gathered}A = p(1 + \frac{r}{4 \times 100} )^{nt} \\ \\ A= 1000(1 + \frac{10}{4 \times 100} )^{1 \times 4} \end{gathered}

A=p(1+

4×100

r

)

nt

A=1000(1+

4×100

10

)

1×4

\begin{gathered}A = 1000(1 + 0.025)^{ 4} \\ \\ A = 1000 \times {1.025}^{4} \\ \\ A= 1103.8\end{gathered}

A=1000(1+0.025)

4

A=1000×1.025

4

A=1103.8

Amount = ₹1103.8

Compound Interest = 1103.8 - 1000 = ₹103.8