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