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    Question

    Calculate the compound interest earned by depositing Rs.

    8,000 at an annual interest rate of 40%, compounded quarterly, for 9 months.
    A Rs.5,048 Correct Answer Incorrect Answer
    B Rs.3,678 Correct Answer Incorrect Answer
    C Rs.2,648 Correct Answer Incorrect Answer
    D Rs.1,648 Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    ATQ,

    Effective rate of interest = 40 ├╖ 4 = 10% Effective number of compounding periods = 4 ├Ч (9 ├╖ 12) = 3 terms Amount after interest = 8,000 ├Ч (1.10)┬│ = 8,000 ├Ч 1.331 = 10,648 Compound Interest = 10,648 тАУ 8,000 = Rs. 2,648

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