Question

If interest is payable quaterly, find the te Compound interest on ris 4500 @ 12% per annum for one year?​

Answer 1

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Given:

Rate = 20%

Principal = Rs. 4500

Time = 6 months

Formula used:

For Compound Interest,

A = P{1 + (R/100)}n

where,

P = Principal

CI = Compound interest

R = Rate

n = Time(years)

Calculations:

When compounded quarterly,

R → R/4 and n → 4n

R = 20/4 = 5

n = 4 × (6/12) = 2

Calculating CI for 2 year,

A = P{1 + (R/100)}n

⇒ A = 4500{1 + (5/100)}2

⇒ A = 4500(21/20)2

⇒ A = 4500(441/400)

⇒ A = Rs. 4961.25

∴ He will get Rs. 4961.25 at maturity.

Total interest% = Interest of first year + Interest of second year

Total interest in percentage = 5 + (5 + 5% of 5) = 10.25%

Amount = P × (100 + Total interest%)/100 = 4500 × (110.25)/100

⇒ Amount = Rs. 4961.25

∴ He will get Rs. 4961.25 at maturity