Question

Ramesh received 32768 re from a bank at the rate of 25/2 % per annum calculated quarterly find the amount he will have to return after 9 months in order to clear his debts.

Answer 1

Answer:

The amount that will have to be returned to clear his debt = Rs.35937

Step-by-step explanation:

Let P = principal (initial amount) = 32768

R = rate of interest per cent per year = 25/2 = 12.5

Now, the basic formula for compound interest is

A = P * (1 + R/100)^N

A = final amount

P = principal (initial amount)

R = rate of interest per cent per year with annual compounding

N = number of years

In our example, we have the time interval as one quarter. Hence, we need to readjust "R" and "N" to correspond to the same number of number of time intervals.

In our case, number of time intervals = 3 (9 months means three quarters)

Since the compounding is quarterly (four times per year), the rate of interest per quarter = 12.5/4 = 3.125

Using R = 3.125; N = 3 and P = 32768, we get:

A = 32768 * (1 + 3.125/100)^3

   = 35937