What is the compound interest on the sum of ₹15625 for 2 years at the rate of 12% per annum, if the interest is 8 months is compounded ?

₹4058

Interest is compounded 8 monthly

New rate = 12% × \(\frac{8}{12}\) = 8%

From the formula for compound interest, we know,

C.I = P(1+$\frac{R}{100})^t$– P

= 15625 [ 1 + \(\frac{8}{100}\) ]³ - 15625

= 15625 [ \(\frac{27}{25}\) × \(\frac{27}{25}\) × \(\frac{27}{25}\) - 1 ]

= 15625 [ \(\frac{19683}{15625}\)  - 1 ]

= 15625 [ \(\frac{4058}{15625}\) ]

= 4058