Multiple choice

Ash opens a savings account in a bank with the annual interest rate of 16%. If she deposits Rs. 8,000.00 in the account and the interest is compounded quarterly, then how much interest will she earn after 1 year?

  1. Rs. 960

  2. Rs. 1,000

  3. Rs. 1,020

  4. Rs. 1,359
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Principal = 8000, Rate = 16% per annum, compounded quarterly (4% per quarter). Time = 1 year (4 quarters). Amount = 8000 * (1 + 0.04)^4 = 8000 * 1.16985856 = 9358.87. Interest = 9358.87 - 8000 = 1358.87, which rounds to 1359.

AI explanation

Using the quarterly compound interest formula A = P(1 + R/400)^(4n), we substitute the given values to get A = 8000(1 + 16/400)^4. This simplifies to A = 8000(1.04)^4, which calculates to a total amount of approximately Rs. 9358.92. Subtracting the principal of Rs. 8000 from this amount yields an interest of approximately Rs. 1,359.

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