Question

Find the amount at compound interest on Rs. 1000 at 20% per annum for nine months if the interest is compounded quarterly.
1. Rs. 1160
2. Rs. 1157.625
3. Rs. 1200
4. Rs. 1100.625

Answer 1

Correct Answer - Option 2 : Rs. 1157.625

Given:

Principal = Rs. 1000

Rate = 20% per annum

Time = 9 months

Formula used:

Amount = P(1 + R/100)^T

Compound Interest = P((1 + R/100)^T– 1)

Concept Used:

If rate is compounded Quarterly, 

then Rate = 20/4 = 5% per quarter

Time period = 9/3 =  3 quarterly

Calculation:

Time = 9 months = 3 quarterly

Rate = 5% per quarter

Amount = P(1 + R/100)^t

⇒ Amount = 1000(1 + 5/100)³ 

⇒ Amount = 1000(21/20)³

⇒ Amount = (1000 × 9261)/8000

⇒ Amount = Rs. 1157.625

∴ The amount in 9 months is Rs. 1157.625