Question

Find the compound interest on Rs. 64000 for 1 year at the rate of $10\%$ per annum compounded quarterly.

Answer 1

Principal (P) = Rs. 64000
Rate (R) $=10\%$ p.a or $\frac{5}{2}\%$ quarterly
Period (T) = 1 year = 4 quarters
$\therefore$ Interest for the first quarter $=\frac{PRT}{100}$
$=Rs.\frac{64000\times 5\times 1}{100\times 2}=Rs.1600$
$\therefore$ Amount after first quarter
= Rs. 64000 + Rs. 1600 = Rs. 65600
Or principal for the second quarter = Rs. 65600
Interest for the second quarter
$=Rs.\frac{65600\times 5\times 1}{100\times 2}=Rs.1640$
Amount after second quarter
= Rs. 65600 + Rs. 1640 = Rs. 67240
Or principal for the third year = Rs. 67240
Interest for the third quarter $=\frac{67240\times 5\times 1}{100\times 2}$
= Rs. 1681
Amount after third quarter
= Rs. 67240 + Rs. 1681 = Rs. 68921
Or principal for the fourth quarter
$=Rs.\frac{68921\times 5\times 1}{100\times 2}=Rs.1723.025$
Total compound interest for 4 quarters or one year = Rs. 1600 + Rs. 1640 + Rs. 1681 + Rs. 1723.025 = Rs. 6644.025