Find the compound interest on Rs. 1,25,000 for 9 months at 8% per annum compounded quarterly.
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Rs. 7,651
When interest is compounded quarterly, the yearly rate is divided by 4 and the time is counted in quarters: 8% a year is 2% a quarter, and 9 months are 3 quarters.
Amount after 3 quarters \(\displaystyle =125000\times\left(1+\frac{2}{100}\right)^3=125000\times\left(\frac{51}{50}\right)^3\)
\(125000=50^3\), so the amount \(=51^3=132651\)
Compound interest, the amount less the principal \(=132651-125000=7651\)