Question

What will happen if interest is compounded quarterly? How many conversion periods will be there? What about the quarter year rate . how much will it be of the annual rate?

Answer 1

Here C.I will be calculated for every 3 months. 

So, 4 time periods will be occurred in 1 year. 

Rate of Interest (R) = R/4 [ ∵ 12/3 = 4 ]

Amount = \(P[1\,+\,(\frac{\frac R4}{100})]^4\)

A = \(P[1\,+\,(\frac{R}{400})]^4\)