A sum of taken for one year at 16% per annum. If the interest is charged after every three
months, then the rate will be
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Answer:
To strictly answer the question, if interest is compounded every 3 months, in onee year, interest will be charged 4 times (12/3 = 4
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1
Answer:
Say the amount borrowed is Rs.100 on 1 January 2018. Compounded at 16% per quarter (every 3 months), we have:
On 1 April 2018
100 + (100* 16/100*3/12) = 104
On 1 July 2018
104 + (104*16/100*3/12) = 108.16
On 1 October 2018
108.16 + (108.16*16/100*3/12) = 112.49
On 1 January 2019
112.49 + (112.49*16/100*3/12) = 116.99
The interest will be calculated for 4 times in a year on the mentioned dates, with the effective rate coming at around 17%.
Step-by-step explanation:
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