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Question

What is the amount Ravi will get at the end of 1 year and 3 months if he invests ₹2000 in a bank at the rate of 10% per annum if the rate is compounded quarterly?

A
₹4716.50
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B
₹2316
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C
₹3715
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D
₹2262.82
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Solution

The correct option is D ₹2262.82
Given,
Principal = ₹2000

Interest rate per annum = 10%

Interest rate per quarter (r) = 2.5%

Since the interest is compounded quarterly, there will be five conversion periods in one year and three months.
So, n = 5 quarters

By using formula for compound interest, we can write

Amount = P[(1+2.5100)n]

Amount=2000[(1+251000)5]

Amount=2262.82

Ravi will have ₹2262.82 at the end of 1 year 3 months.


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