Find the compound interest on ₹ 10,000 in one year at 4 $%$ per annum, the interest being compounded quarterly.

₹ 400.0401

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₹ 406.0401

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₹ 410.0401

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₹ 414.0401

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Solution

The correct option is B
₹ 406.0401

Principal (P) = ₹ 10000

Rate (R) = 4% per annum which is 1% per quarter

Time (n) = 4 (as 1 year has 4 quarters in it)

Using the formula A = $P \times (1 + \frac{R}{100})^{n}$ , we have,

Amount = $[10000 \times (1 + \frac{1}{100})^{4}]$ = 10,406.0401

Compound Interest = Amount - Principal

$∴$ C.I. = ₹ (10,406.0401 - 10000) = ₹ 406.0401

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