Given:
Principal = Rs. 2000
Rate of interest = 20% p.a. compounded quarterly.
Time = 1 year
To find:
The compound interest.
Solution:
Formula for amount:
[tex]A=P\left (1+\dfrac{r}{n}\right)^{nt}[/tex]
where,
P = Principal
r = Rate of interest
t= Time
n = number of times interest compounded in an year.
Putting P=2000, r=0.2, n=4 and t=1, we get
[tex]A=2000\left (1+\dfrac{0.2}{4}\right)^{4(1)}[/tex]
[tex]A=2000\left (1.05\right)^{4}[/tex]
[tex]A=2000\left (1.21550625\right)[/tex]
[tex]A=2431.0125[/tex]
Now, the compound interest is
[tex]C.I.=A-P[/tex]
[tex]C.I.=2431.0125-2000[/tex]
[tex]C.I.=431.0125[/tex]
Therefore, the compound interest is Rs 431.0125.
