Question

calculate compound interest on rupees 1000 over a period of 1 year at 10% per annum if interest is compounded quarterly

Answer 1

Principal Amount =P= 1000

No.of periods= n = 1 year @ compounded quarterly = 1×4 = 4

Rate of interest Per Annum= i = 10%/4 = 2.5 %

Compound interest = P((1+i)^n-1)

= 1000((1+2.5/100)^4-1)

=1000((1 +0.025)^4-1)

=1000(1.025)^4- 1)

=1000(1.1038 -1)

=1000(0.1038)

=999