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Find the compound interest on Rs 160000 for one year at the rate of 20% per annum, if the interest is compounded quarterly.

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Question

Find the compound interest on Rs 160000 for one year at the rate of 20% per annum, if the interest is compounded quarterly.

Sum
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Solution

Given details are,

Principal (p) = Rs = 160000

Rate(r) = 20% = 20/4 = 5% (for quarter year)

Time = 1 year = 1 x 4 = 4 quarters

By using the formula, 

A = P (1 + R/100)n

= 160000 (1 + 5/100)4

= 160000 (105/100)4

= Rs 194481

∴ Compound Interest = A − P = Rs 194481 − Rs 160000 = Rs 34481

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