Compounded quarterly — Aptitude Question
Compounded quarterly: What is the amount on ₹10,000 at 8% per annum for 1 year, compounded quarterly? Answer and worked solution on CodeKairo.
- Topic: Simple & Compound Interest
- Section: Quantitative Aptitude
- Difficulty: Hard
- Time target: 90 seconds
Question
What is the amount on ₹10,000 at 8% per annum for 1 year, compounded quarterly?
Options
- ₹10,800
- ₹10,824
- ₹10,850
- ₹10,900
Show the answer and the worked solution
Correct answer: B. ₹10,824
Worked solution
- Rate per quarter = 8 ÷ 4 = 2%; periods = 4.
- Amount = 10,000 × 1.02⁴ = 10,000 × 1.08243 ≈ ₹10,824.
Answer: ₹10,824.
The idea
Divide the annual rate by the number of compounding periods and raise to that power. Quarterly compounding at 8% gives an effective annual rate of about 8.24%.
Shortcut. Quarterly compounding beats a flat 8% (₹10,800) by only a few tens of rupees, so ₹10,824 is the only option that fits; ₹10,850 would need 8.5%.
Common trap. ₹10,800 — applying a flat 8% for the year, which ignores the interest each quarter earns on the quarters before.
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