2022 · Q40
If C is the compound interest on Rs. 10,000 for one year at 4% per annum when compounded quarterly, then which one of the following is correct?
Elementary MathematicsSimple and Compound Interest
- AC
- BRs. 100
- CRs. 200
- DC > Rs. 400
Explanation
With quarterly compounding, C = 10000(1.01)⁴ − 10000 = 10000(1.04060401−1) = ₹406.04, which exceeds ₹400. A common mistake is to use simple interest (₹400) or annual compounding, both of which understate the quarterly-compounded amount. The keyed option is D.