Question

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Find the rate at which Rs 4000 will give Rs.630.50 as compound interest in 9 months, interest being compounded quarterly.

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Answer 1

Given Principal P = 4000, n = 1 year. Given that the interest compounded quarterly, Compound Interest CI = 630.50.

We know that A = P + CI

                            = 4000 + 630.50

                            = 4630.5

We know that A = P(1 + r/100)^4n

                       4630.5 = 4000(1 + R/100 * 4)^4 * 1

                       4630.5 = 4000(1 + R/400)^4

                       4630.5/4000 = (1 + R/400)^4

                       1.1576 = (1 + R/400)^4

                       (1.1576)^1/4 = (1 + R/400)

                       1.0372 = (1 + R/400)

                       1.0372 - 1 = R/400

                       0.0372 = R/400

                        R = 14.8%.

Therefore the Rate = 14.8%.

Hope this helps