Question

In a bank, deposits can be made for periods ranging from 6 months to 10 years. Every quarter, an interest will be added on to the principal. The rate of interest applied is 9% per annum for periods form 12 months to 23 months and 10% per annum for periods form 24 months to 120 months. An amount of Rs. 1,000 invested for 2 years to grow, will be nearly
1. Rs. 1, 218
2. Rs. 1,334
3. Rs. 1,414
4. Rs. 1,538

Answer 1

Correct Answer - Option 1 : Rs. 1, 218

Explanation:

The person invests for 2 years in 24 months.

Thus, he has to compensate with 10 % per annum rate which is compounded quarter let original value invested be A.

\({\rm{Value\;after\;one\;quarter\;}} = \left( {1 + \frac{{0.10}}{4}} \right)A\)

∴ Value after eight quarter i.e. 2 years

\(\therefore {\left( {1 + \frac{{0.10}}{4}} \right)^8}A = 1.2184A\)

∴ A = 24000 (Given 1000 Rs per month)

∴ Value after 2 years = Rs. 1218