Multiple choice

What is the difference (in Rs.) in compound interest earned in 1 year on a sum of Rs. 10,000 at 40% per annum compounded quarterly and annually?

  1. 461

  2. 346

  3. 463

  4. 641
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Annual interest: 10000 * 0.4 = 4000. Quarterly interest: Rate = 40%/4 = 10%. Amount = 10000 * (1.1)^4 = 10000 * 1.4641 = 14641. Interest = 4641. Difference = 4641 - 4000 = 641.

AI explanation

The compound interest compounded annually is 10000 times 40 divided by 100, equaling Rs. 4000. The compound interest compounded quarterly uses the formula A equals P times 1 plus R divided by 400 raised to the power of 4, giving 10000 times 1.1 to the power of 4, which equals Rs. 14641 and yields an interest of Rs. 4641. The difference between the two interests is 4641 minus 4000, equaling Rs. 641.

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