Amit took a loan of ₹ 8000 from the bank for 1 year at an interest rate of 20% per annum. Calculate the amount he has to pay to the bank at the end of this period if the interest rate is compounded quarterly.
A
₹ 9327
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B
₹ 8321
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C
₹ 9423
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D
₹ 9724
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Solution
The correct option is D ₹ 9724 Given Principal = ₹ 800 Interest rate per annum (r) = 20% Interest rate quartely = 204 = 5 %
Since the interest is compounded quarterly, so there will be four conversion periods in one year.
So, n = 4
By using formula for compound interest, we can write