What is the compound interest on a sum of ₹37,500 for 1 (1/3) years at a rate of 12% per annum, compounded every 8 months?
Show answer & explanation
Correct answer: C
Explanation
Principal = ₹37,500
Time = 1 1/3 years = 16 months
Compounding takes place every 8 months.
Therefore, total periods = 2
Interest rate per 8-month period = 12 × 8/12 = 8%
Amount = 37,500 × 108/100 × 108/100 = ₹43,740
Compound Interest = 43,740 − 37,500 = ₹6,240