Interest is compounded monthly
Interest is compounded quarterly
Interest is compounded half-yearly
Interest is compounded annually
Answers
Answer:
Only the 1+r/100 is true.
Step-by-step explanation:
The actual Formula for compound interest is A=P(1+r/100)^n. For quarterly, It is A=P(1+r/4/100)^4n. This is because there are four quarterlys in a year(3, 6, 9, 12.) The rate gets divided by 4 and the Number of years gets multiplied by 4.
Example sum: Find the C.I. paid if $10,000 is deposited at a rate of 8% per annum for 1 year compounded quarterly.
We know A=P(1+r/4/100)^4n
A=10,000(1+8/4/100)^4(1)
A=10,000(1+2/100)^4
A=10,000(1+1/50)^4
A=10,000(50/50+1/50)^4
A=10,000 x 51/50 x 51/50 x 51/50
2 of the 50s under the 51s get cancelled by simplification because 50 x 200 is 10,000 and 50 x 4 is 200. So after that we are left at 4(originally 10,000) x 51 x 51 x 51/50
51 x 51=3,601
3601 x 51=1,83,651
1,83,651 x 4= 734604
734604/50= 14692.08
C.I= 14,692.08-10,000
C.I.= 4692.08
Hope this helps.