Question

find.ci.when.p.500.r.12.n.2​

Answer 1

Answer:

To find compound interest when interest is compounded quarterly, we use the following formula :

A = P ( 1 + R/4 )4n and C.I. = A – P

Where, P = Principal

R = Rate of interest p.a (per annum i.e annually)

n = number of years.

Examples :

1) Find the compound interest on $320,000 for one year at the rate of 20% p.a., if the interest rate is compounded quarterly.

Solution:

Here, P = $320,000, R = 20% p.a. and n = 1 year.

∴ Amount after 1 year = P ( 1 + R/4 ) 4n

= 320,000 x ( 1 + 0.20/4 ) 4 x 1

= 320,000 x ( 1 + 0.05) 4

= 320,000 x (1.05 ) 4

= 320,000 x 1.21550

= Rs. 388,962

∴ Compound interest = 388,962 – 320,000 = 68,962