The compound interest on ₹ 25000 at 8% per annum for 6 months when compounded quarterly is
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → ₹ 1010
When interest is compounded quarterly, the yearly rate is split into four and each quarter counts as one period. So 8% a year becomes 2% a quarter, and 6 months are 2 quarters.
Amount \(=25000\times(1.02)^2=25000\times1.0404=25{,}010\)
Compound interest \(=25010-25000=\) ₹ 1010
Shortcut: Two periods at 2% give \(2+2+\frac{2\times2}{100}=4.04\%\) in all, and 4.04% of 25000 is 1010.