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Rs 7500 is borrowed at compounded interest at the rate of 4% per annum .what will be the amount to be after 6 month if interest is compounded quarterly?
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Rs 7500 is borrowed at compounded interest at the rate of 4% per annum...
Calculation of Compound Interest:
Compounded interest formula is: A = P (1 + r/n) ^ (nt) where
- A = final amount
- P = principal amount (initial investment)
- r = annual nominal interest rate (as a decimal)
- n = number of times the interest is compounded per year
- t = number of years
In this case, P = Rs 7500, r = 4%, t = 0.5 years (6 months)
Calculation of Quarterly Compound Interest:
Since interest is compounded quarterly, n = 4 (four quarters in a year)
Therefore, the formula becomes: A = P (1 + r/4) ^ (4*0.5)
= 7500 (1 + 0.04/4) ^ 2
= 7500 (1.01) ^ 2
= Rs 7627.50
Explanation:
Compound interest involves earning interest on both the principal amount and the accumulated interest. In this case, Rs 7500 was borrowed at a rate of 4% per annum, which means that the interest rate for each period is 1% (4%/4 quarters). When interest is compounded quarterly, the interest earned in each quarter is added to the principal amount, and interest is then calculated on the new amount for the next quarter. This process is repeated for each quarter, resulting in a higher final amount than if interest was simple interest.
In this case, after 6 months (0.5 years), the amount to be repaid is Rs 7627.50, which includes Rs 127.50 in interest earned through quarterly compounding.
Compounded interest formula is: A = P (1 + r/n) ^ (nt) where
- A = final amount
- P = principal amount (initial investment)
- r = annual nominal interest rate (as a decimal)
- n = number of times the interest is compounded per year
- t = number of years
In this case, P = Rs 7500, r = 4%, t = 0.5 years (6 months)
Calculation of Quarterly Compound Interest:
Since interest is compounded quarterly, n = 4 (four quarters in a year)
Therefore, the formula becomes: A = P (1 + r/4) ^ (4*0.5)
= 7500 (1 + 0.04/4) ^ 2
= 7500 (1.01) ^ 2
= Rs 7627.50
Explanation:
Compound interest involves earning interest on both the principal amount and the accumulated interest. In this case, Rs 7500 was borrowed at a rate of 4% per annum, which means that the interest rate for each period is 1% (4%/4 quarters). When interest is compounded quarterly, the interest earned in each quarter is added to the principal amount, and interest is then calculated on the new amount for the next quarter. This process is repeated for each quarter, resulting in a higher final amount than if interest was simple interest.
In this case, after 6 months (0.5 years), the amount to be repaid is Rs 7627.50, which includes Rs 127.50 in interest earned through quarterly compounding.
Community Answer
Rs 7500 is borrowed at compounded interest at the rate of 4% per annum...
7500+1%+1%. 7650.75
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Rs 7500 is borrowed at compounded interest at the rate of 4% per annum .what will be the amount to be after 6 month if interest is compounded quarterly?
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Rs 7500 is borrowed at compounded interest at the rate of 4% per annum .what will be the amount to be after 6 month if interest is compounded quarterly? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Rs 7500 is borrowed at compounded interest at the rate of 4% per annum .what will be the amount to be after 6 month if interest is compounded quarterly? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Rs 7500 is borrowed at compounded interest at the rate of 4% per annum .what will be the amount to be after 6 month if interest is compounded quarterly?.
Rs 7500 is borrowed at compounded interest at the rate of 4% per annum .what will be the amount to be after 6 month if interest is compounded quarterly? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Rs 7500 is borrowed at compounded interest at the rate of 4% per annum .what will be the amount to be after 6 month if interest is compounded quarterly? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Rs 7500 is borrowed at compounded interest at the rate of 4% per annum .what will be the amount to be after 6 month if interest is compounded quarterly?.
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