Govind took a loan of Rs. 12,000 from a bank for a period of 1 year. If the bank charges compounded interest quarterly at the rate of 16% p.a., how much interest has he to pay to the bank?

Given:

Principal $P=Rs.\ 12000$

Time $T=1\ year$

Rate of interest $r=16 \%$

To do:

We have to find the compound interest when the rate of interest is compounded quarterly.

 Solution:

Time $= 1$ year

Rate of interest $=16 \%$ per annum compounded quarterly

Number of compounds $=4$

Amount $= P(1+\frac{\frac{r}{4}}{100})^{nT} $

$= 12000(1+\frac{\frac{16}{4}}{100})^{4 \times 1}$

$= 12000(\frac{104}{100})^4$

$= 12000(1.04)^4 $

$=Rs.\ 14038.30$

Compound Interest $=$ Amount $-$ Principal

$=Rs.\ (14038.30-12000)$

$=Rs.\ 2038.30$ 

Therefore, he has to pay Rs. 2038.30 as interest to the bank.