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Question

Find the compound interest on Rs.10,000 for 1 year at 20% per annum interest being payable quarterly

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Solution

Formula for amount when a principal of P compounded at the rate of r% per time interval for n time intervals is given by A=P(1+r100)n

Given, Rate of interest = 20% per annum = 204=5% per quarter

Time =1 year =4 quarters

Principal =Rs.10000
Amount at the end of 1 year A=10,000(1+5100)4
=10,000×(1.05)4
=10,000×1.21550625=12,155.0625
Compund Interest =AP=12,155.02510,000=2155.0625


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