What is the compound interest on ₹20,000 for 9 months at the rate of 4% per annum, when interest is compounded quarterly?

₹606.02

Interest is compounded quarterly,

Actual rate of interest = \(\frac{4}{4}\)% = 1%

From the formula for compound interest, we know,

C.I = P(1+$\frac{R}{100})^t$– P

= 20000 [ 1 + \(\frac{1}{100}\) ]³ - 20000

= 20000 [ \(\frac{101}{100}\) ]³ - 20000

= 20000 [ \(\frac{101}{100}\) × \(\frac{101}{100}\) ×  \(\frac{101}{100}\) - 1 ]

= 20000 [ \(\frac{ 1030301}{1000000}\) - 1 ]

= 20000 [ \(\frac{ 30301}{1000000}\) ]

= Rs. 606.02