What is the compound interest on a sum of 8000 at the rate of 5% per annum compounded quarterly for 3 months?
Answer & explanation
Correct answer: option 1
Interest is compounded quarterly.
So, Actual rate of interest = \(\frac{5}{4}\)%
From the formula for compound interest, we know,
C.I = P(1+$\frac{R}{100})^t$– P
= 8000 [ 1 + \(\frac{5}{400}\) ] - 8000
= 8000 [ \(\frac{81}{80}\) ] - 8000
= 8100 - 8000
= Rs. 100