A sum is taken for two years at 16% p.a. If interest is compounded after every three months, the number of times for which interest is charged in 2 years is
(a) 8
(b) 4
(c) 6
(d) 9

Solution:

Let the sum be = P

Rate of Interest = 16% p.a.

Since the interest is compounded quarterly the effective rate of interest is:

Effective rate of interest = 16%/4 = 4%

Every three months in year the interest will be added to the principal to form the new principal for the next quarter.

There are four quarters in one year and there are eight quarters in two years which implies that the interest is charged eight times.

✦ Try This: A sum is taken for two years at 16% p.a. If interest is compounded every month, the number of times for which interest is charged in 2 years is (a) 16, (b) 24, (c) 12, (d) 14

Let the sum be = P

Rate of Interest = 16% p.a.

Since the interest is compounded monthly the effective rate of interest is:

Effective rate of interest = 16%/12 = 4/3 %

Every month the interest will be added to the principal to form the new principal for the next month.

There are12 months in one year and there are 24 months in two years which implies that the interest is charged twenty four times.

☛ Also Check: NCERT Solutions for Class 8 Maths Chapter 8

NCERT Exemplar Class 8 Maths Chapter 9 Problem 15

A sum is taken for two years at 16% p.a. If interest is compounded after every three months, the number of times for which interest is charged in 2 years is (a) 8, (b) 4, (c) 6, (d) 9

Summary:

A sum is taken for two years at 16% p.a. If interest is compounded after every three months, the number of times for which interest is charged in 2 years is eight times

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