Multiple choice

Eden lends Rs. $4000$ to John at an interest rate of only $6$% per year compounded quarterly. Find the balance that John has to return at the end of $2$ years.

  1. $4480$
  2. $4506$
  3. $4500$
  4. $4501$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Principal = 4000, rate = 6% per year = 1.5% per quarter. Time = 2 years = 8 quarters. Amount = 4000 * (1 + 0.015)^8 = 4000 * (1.015)^8 = 4000 * 1.12649 = 4505.96, which rounds to 4506.

AI explanation

Using the compound interest formula Amount = Principal times (1 + Rate divided by 400) raised to the power of (4 times Time), we calculate the balance as 4000 times (1 + 6 divided by 400) raised to the power of 8. This simplifies to 4000 times 1.015 raised to the power of 8, which equals 4000 times 1.12649. The final balance John has to return is approximately Rs. 4506.

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