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Question

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


Solution

Principal (P) = Rs. 64000
Rate (R) =10% p.a or 52% quarterly
Period (T) = 1 year = 4 quarters
Interest for the first quarter =PRT100
=Rs.64000×5×1100×2=Rs.1600
Amount after first quarter
= Rs. 64000 + Rs. 1600 = Rs. 65600
Or principal for the second quarter = Rs. 65600
Interest for the second quarter
=Rs.65600×5×1100×2=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 =67240×5×1100×2
= Rs. 1681
Amount after third quarter
= Rs. 67240 + Rs. 1681 = Rs. 68921
Or principal for the fourth quarter
=Rs.68921×5×1100×2=Rs.1723.025
Total compound interest for 4 quarters or one year = Rs. 1600 + Rs. 1640 + Rs. 1681 + Rs. 1723.025 = Rs. 6644.025

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