Question

Calculate compound interest on RS 1000 over a period of 1 year at 10% per annum,if interest is compounded quarterly

Answer 1

We have Annual amount ,A = P(1+r/n)^nt

Here, P=1000
r=10%
n=4
t=1
nt=4
One year = 4 quarters
A=1000(1+(10/4)/100)^4
=1000(1+5/2*1/100)^4
=1000(1+1/40)^4
=1000(41/40)^4
=1103.81
Compund Interest = A-P=1103.81-1000
=103.81 rupees.

Thus Compound interest = 103.81 Rs