What is the compound interest earned on Rs. 80000 at 40% per annum in one year, compounded quarterly?

Rs. 37128

The correct answer is Option (2) → Rs. 37128

Step 1: Recall the formula for compound interest

$A = P \left(1 + \frac{r}{n}\right)^{n t}$

Where:

• A = final amount
• P = principal = 80,000
• r = annual interest rate = 40% = 0.4
• n = number of compounding periods per year = 4 (quarterly)
• t = time in years = 1

Step 2: Plug in the values

$A = 80000 \left(1 + \frac{0.4}{4}\right)^{4 \times 1} = 80000 \left(1 + 0.1\right)^4 = 80000 (1.1)^4$

Step 3: Calculate $1.1^4$

$1.1^2 = 1.21$

$1.21^2 = 1.4641$

So,

$A = 80000 \times 1.4641 = 117,128$

Step 4: Find compound interest

$\text{CI} = A - P = 117,128 - 80,000 = 37,128$