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Question

Ravi took a loan of ₹16,000 for one year at 20% interest p.a. compounded quarterly. The amount that Ravi has to pay after one year is:

This question was previously asked in
RRB NTPC 2019 CBT 1 Question Paper PDF (31-Jan-2021) (Shift 1)
The correct answer is
₹19,448.10

To find the total amount Ravi has to pay after one year with the given conditions, we need to use the formula for compound interest. Compound interest is calculated using the formula:

\(A = P \left(1 + \frac{r}{n}\right)^{nt}\)

where:

  • \(A\) is the future value of the investment/loan, including interest.
  • \(P\) is the principal investment/loan amount (₹16,000).
  • \(r\) is the annual interest rate (decimal) (20% or 0.20).
  • \(n\) is the number of times that interest is compounded per unit year (quarterly compounding means \(n = 4\)).
  • \(t\) is the time the money is invested/borrowed for in years (1 year).

Substituting the given values into the formula, we get:

\(A = 16000 \left(1 + \frac{0.20}{4}\right)^{4 \times 1}\)

Simplifying further:

\(A = 16000 \left(1 + 0.05\right)^{4}\)

\(A = 16000 \left(1.05\right)^{4}\)

Calculating the power of 1.05 raised to 4:

\((1.05)^4 = 1.21550625\)

Now, substitute back to find A:

\(A = 16000 \times 1.21550625\)

Calculate the final amount:

\(A \approx 19448.10\)

Therefore, the amount that Ravi has to pay after one year is ₹19,448.10, which matches the first option.

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Similar Questions

  1. Sunil and Kamal took loan of ₹40,000 each for 1 year 6 months from a moneylender who charged simple interest from Sunil @ 11% per annum and compound interest from Kamal @ 10% per annum compounded semi-annually. Who paid more interest and by what amount?

Important Questions from Interest

  1. The difference between compound interest and simple interest on an amount of Rs.25,000 for 2 years is Rs.250. What is the rate of interest per annum? (In %)
  2. Increase in Debt-Equity ratio in a firm __________ to equity holders.
  3. The difference between the compound interest and simple interest on a certain amount at 5%per annum for 2 years is Rs. 15.The principal amount is equal to :

  4. Dhoni invested Rs 22000 at 12% simple interest per annum and Rs 15000 at 10% compound interest per annum, then find the total amount earned by him at the end of 2 years.

  5. The difference between the compound interest and the simple interest on a sum of Rs. 8,000 for 2 years at the rate of 5% p.a. is:

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