Multiple choice

The compound interest on Rs. 10,000 for 9 months at 20% per annum, interest being compounded quarterly, is -

  1. Rs. 1576.25

  2. Rs. 1428.25

  3. Rs. 1500.75

  4. Rs. 8000.50
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Quarterly compounding means interest is added every 3 months. For 9 months, we have 3 compounding periods. The quarterly rate is 20%/4 = 5% per quarter. Using the compound interest formula A = P(1 + r/100)^n, where P = Rs. 10,000, r = 5%, n = 3, we get A = 10000 × (1.05)^3 = 10000 × 1.157625 = Rs. 11,576.25. The compound interest is A - P = Rs. 1,576.25. Option B incorrectly uses simple interest or wrong compounding. Option C uses a miscalculation. Option D is unreasonably large.

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