Quarterly Compound Interest
In this case, the general equation remains the same, there is change only in the value of n
Here, n is equal to 4
Compound Interest = P (1 + R/400)4t – P
Amount = P (1 + R/400)4t
Example: What will be the amount needed to pay for the amount of 10,000 if it is taken as a loan for 5 years at a 2 percent rate compounding quarterly
Solution:
Amount = P (1 + R/100×n)t×n
Principal= 10,000
Rate of Interest = 2
n = 4
Time period = 5 yearsAmount = P (1 + R/100×n)t×n
Amount = 10,000(1 + 2/400)5×4
Amount = 11,048.9557Thus, the amount paid at the end of 5 years is ₹ 11,048.9557
Quarterly Compound Interest Formula
Interest is the additional money we pay for the use of some other person’s money. When we borrow some amount of money from a person or organization we give them additional money as an incentive for it, this additional sum of money is called Interest. The amount of money you initially lend is called the principal and the duration of that loan is called the time period. For Example, if you pay 2000 in interest for a loan of 20,000 this means the interest is 2000 and the principal is 20,000 and the rate of interest is 10 percent.
Based on the type of repayment Interest can be classified as mainly two types:
- Simple Interest
- Compound Interest.