Question

arka took a loan of rupees 160000 from a finance company to buy a car if the company charges interest at 20% per annum compounded quarterly what amount will discharge his Debt after 1 year

Answer 1

amount = 194481will discharge his debt after 1 year

Answer 2

Answer:

Solution :-

Principal = Rs. 390625

As the interest is compounded quarterly @ 16 % per annum, the rate of interest will be 1/4th of 16 %

R = 16/4 = 4 %

Time is 1 year and there are 4 quarters in a years.

So, 

T = 4

A = P(1 + R/100)ⁿ

A = 390625(1 + 4/100)⁴

A = 390625 × 104/100 × 104/100 × 104/100 × 104/100

A = 390625 × 1.04 × 1.04 × 1.04 × 1.04

A = 456976

Arun will have to pay Rs. 456976 after 1 year to discharge his debt.

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