Question

A person took out a loan of ₹16,000 from a bank which charges interest compounded quarterly. The annual rate of interest is 10%. How much should be pay back after 9 months to settle the loan.

• A. ₹ 17055
• B. ₹ 16250.5
• C. ₹ 17565
• D. ₹ 17230.25

Answer 1

The correct option is D ₹ 17230.25

Amount borrowed $P=₹16000$
Interest rate = 10%

This is quarterly compounding, so interest will be 4 times in a year

So, quarterly rate $r=\frac{10}{4}=2.5$

Amount to be repaid after 9 months

$A=p(1+\frac{r}{100}{)}^n$

$=16000\times {(1+\frac{2.5}{100})}^3$
$=16000\times {\left(\frac{102.5}{100}\right)}^3$
$=16000\times \frac{102.5}{100}\times \frac{102.5}{100}\times \frac{102.5}{100}$
$=₹17230.25$

Hence, he should pay Rs $17,230.25$ after 9 months to settle the loan.