Multiple choice

A sum is taken for two years at 16% p.a. If interest is compounded after every three months the number of times for which interest is charged in 2 years is

  1. 8

  2. 4

  3. 6

  4. 9
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Interest is compounded every three months, which means there are 4 compounding periods in one year. For a duration of 2 years, the total number of compounding periods is 2 * 4 = 8.

AI explanation

When interest is compounded after every three months, it is compounded quarterly. The number of compounding periods in one year is 12 divided by 3, which equals 4. Using the formula for total periods n = number of years times periods per year, we get n = 2 times 4. The interest is charged 8 times.

Keep practicing — related questions