Question
What is the compound interest (in Rs.) on a sum of Rs.
8192 for 1(1/4) years at 15% per annum, if interest is compounded 5-monthly?Solution
Time period = 3 (15 months/5) Rate as per 5-monthly basis = 5/12 × 15 = 25/4% Compound Interest = 8192 × (1 + 25/4 ÷ 100)3 - Principal ⇒ 8192 × (1 + 1/16)3 - 8192 = 8192 [ 17/16 × 17/16 × 17/16 - 1] ⇒ 8192 [(4913 - 4096) ÷ 4096] ⇒ 8192 × 817/4096 ⇒ 1634
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