What is the compound interest on a sum of Rs. 13,000 at 15% p.a. in 2 years, if the interest is compounded 8-monthly?
1. Rs. 4,404
2. Rs. 4,330
3. Rs. 4,033
4. Rs. 4,303
1. Rs. 4,404
2. Rs. 4,330
3. Rs. 4,033
4. Rs. 4,303
Correct Answer – Option 4 : Rs. 4,303
Given:
Principal = Rs.13000
Rate of interest = 15%
Effective rate of interest = 15 × 8/12 = 10%
and 2 years = 24 months = 3 eight monthly
Formula:
Let P = Principal, R = rate of interest and N = time period
Compound interest = P(1 + R/100)3 – P
Calculation:
∴ Compound interest = 13000(1 + 10/100)3 – 13000 = Rs.4303
For compound interest calculated eight monthly
R = (original rate) × 8/12
Time convert into months.