Rs. 11,000 is borrowed at compounded at the rate of 24% per annum. What will be the approximate amount to be paid after 1 year? It is given that interest is compound quarterly.
Solution
Correct Answer: Option C
Since Interest is to be compounded quarterly,
Finding quarterly rate of interest = 24/4 % = 6 %, ie, 6% per quarter.
Hence, there will be 4 compounding, each after 3 months.
\(\begin{array}{l} \therefore Requiredamount = P{\left( {1 + \frac{6}{{100}}} \right)^4}\\ = 11000{\rm{}} \times {\rm{}}\frac{{106}}{{100}} \times \frac{{106}}{{100}} \times \frac{{106}}{{100}} \times \frac{{106}}{{100}} \end{array}\)
= Rs. 13887.25
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