Multiple choice

If Rohan opens a bank account with Rs. 20,000 and his bank compounds the interest quarterly at an interest rate of 8% per annum, how much money does he have at the end of the year? (Assume that he does not deposit or withdraw any money from the account.)

  1. Rs. 21,948.69

  2. Rs. 24,649.65

  3. Rs. 21,648.64

  4. Rs. 25,648.64

  5. Rs. 25,555.64
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The formula for compound interest is A = P(1 + r/n)^(nt). Here, P = 20000, r = 0.08, n = 4 (quarterly), and t = 1. A = 20000(1 + 0.08/4)^4 = 20000(1.02)^4 = 20000 * 1.08243216 = 21648.64.

AI explanation

Using the quarterly compounding formula, Amount equals Principal times 1 plus Rate over 400 raised to the power of 4 times the number of years. The new rate per quarter is 8% divided by 4, which is 2%. For 4 quarters in a year, the amount is 20000 times 1.02 raised to the power of 4. This evaluates to 20000 times 1.08243216, resulting in a final balance of Rs. 21648.64.

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