What is the compound interest (in ₹) on a sum of 8192 for $1\frac{1}{4}$ years at 15% per annum, if interest is compounded 5- monthly ?
Answer & explanation
Correct answer: option 1
Amount = Principal × ( 1 + \(\frac{rate }{100}\) )n
Interest is compounded 5 - monthly .
So , n = \(\frac{15}{5}\) = 3
Rate = \(\frac{5 }{12}\) × 15% = 6.25%
Now ,
Compound Interest = Principal × ( 1 + \(\frac{rate }{100}\) )n - Principal
= 8192 × ( 1 + \(\frac{6.25}{100}\) )3 - 8192
= 8192 × ( 1 + \(\frac{1}{16}\) )3 - 8192
= 8192 × \(\frac{17}{16}\)× \(\frac{17}{16}\)× \(\frac{17}{16}\) - 8192
= 9286 - 8192
= Rs.1634