Question

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

Answer 1

Principal=$1000
n=1 year=4 quarters
r=10%=10%/4 per quater
Amount = Principle [ 1+r/100] to power n
=1000 [1+10/400] power 4
=1000×410/400×410/400×410/400×410/400
=$110381.3
CI=A-P
=$110381.3-$1000=$109381.3
Hope it helped ☺

Answer 2

Given Principal = 1000,

           Rate of interest = 10%.

          T = 1 year = 4 quarters = 4 * 1 = 4..

Amount after 1 year A = P(1 + r/100)^n

                                     = 1000(1 + 0.10/4)^4

                                     = 1000(1 + 0.025)^4

                                     = 1000(1.025)^4

                                    = 1000 * 1.1038

                                    = 1103.81.


We know that CI = A - P

                            = 1103.81 - 1000

                            = 103.812.