Multiple choice

The annual income of Ruby in $2010$ was around Rs. $21000$. If she invested one-third of it at $4$% interest compounded quarterly, then what would be her savings at the end of a year?

  1. $7184$
  2. $7284$
  3. $7384$
  4. $7484$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Investment = 21000 / 3 = 7000. Rate = 4% per annum, compounded quarterly = 1% per quarter. Time = 1 year = 4 quarters. Amount = 7000 * (1 + 0.01)^4 = 7000 * (1.01)^4 = 7000 * 1.04060401 = 7284.228. Savings = 7284.

AI explanation

Ruby invests one-third of her income, which is 21000 divided by 3, equaling Rs. 7000. Using the compound interest formula with a quarterly rate of 1% for 4 periods, the maturity amount is 7000 times (1 plus 0.01) raised to the power of 4, or 7000 times 1.040604, resulting in Rs. 7284.24.

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