Question

The compound interest on Rs.1,40,000 for 6 months at 12% per annum, interest is compounded quarterly. Find the compound interest.
1. Rs.7678
2. Rs.8526
3. Rs.6789
4. Rs.4534

Answer 1

Correct Answer - Option 2 : Rs.8526

Given

Principal = Rs 1,40,000

Time = 6 months

Rate = 12% per annum

Concept

When compound interest in given in quarterly basis, then rate is divided by 4 and time is conveyed into quarters. As 1 quarter = 3 months.

Formula used

Compound interest = P{[ 1 + (r%)^t - 1]

Where p, r and t is principal, rate and time respectively

Calculation

Rate= 12/4 

⇒ 3%

Time = 6 Months

⇒ 2 quarters

Compound interest = 140000{[1 + (3/100)² - 1]

⇒ 140000 {(103/100)² - 1}

⇒ 140000 {(10609/10000) - 1}

⇒ 140000 {(10609 - 10000)/10000}

⇒ 140000 {(609/10000)}

⇒ Rs.8526

∴ Compound interest is Rs.8526