A man invests ₹8,000 in a finance company which provides 24% annual compound interest, compounded monthly. Compute the compound interest on the invested amount for 3 months.
₹489.66
The company gives 24% annual compound interest, compounded monthly.
Step 1: Find the monthly interest rate.
Monthly rate = Annual rate / 12 = 24%/12 = 2% per month.
Step 2: Use the compound interest formula for 3 months.
Amount = P(1 + r/100)^n, where P = ₹8000, r = 2%, n = 3 months.
Amount = 8000 × (1.02)^3
Step 3: Calculate (1.02)^3.
(1.02)^2 = 1.0404
(1.02)^3 = 1.0404 × 1.02 = 1.061208
Step 4: Find the amount.
Amount = 8000 × 1.061208 = ₹8489.664
Step 5: Compound Interest = Amount − Principal.
Compound Interest = 8489.664 − 8000 = ₹489.664 ≈ ₹489.66
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