Find the compound interest on Rs. 125000 for 9 months at 8% per annum compounded quarterly.

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1176

9845

7651

10147

answer is C.

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Detailed Solution

Concept- The basic formula of Compound Interest is

Where, A = Final Amount i.e., (Principle + Interest).
P = Principle on which Interest in compounded
R = Rate of Compound Interest per annum
n = Time period of interest
Here, the only twist is that Interest is compounded Quarterly as mentioned in the question statement.
Thus, we have to convert the Annual interest rate to a Quarterly interest rate.
We also have to convert the time period into a number of Quarters.
Step-by-step explanation is as follows-
Given,
P = Rs. 125000
R = 8% per annum,

per quarter…[Since quarter means

]
R = 2% quarterly
n = 9 months…[Given]

n = 3 quarters.
Using the above-mentioned formula of Compound Interest in the Concept Section,

We get,

A = Rs. 132651.
Since, A = P + Interest,
Interest = (A – P)
Interest = Rs. (132651 – 125000)
Interest = Rs. 7651.
Hence, the Correct Answer is 3) Rs.7651.

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