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
• B. ₹2316
• C. ₹3715
• D. ₹2262.82

Answer 1

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

$\text{Amount = P}\left[{(1+\frac{2.5}{100})}^n\right]$

$\text{Amount}=2000\left[{(1+\frac{25}{1000})}^5\right]$

$\text{Amount}=₹2262.82$

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