Question:
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:
(a) 8
Explanation:
Rate of interest is compounded after every three months.
Thus, the time period for amount in a year will be 4 times.
If amount is taken for 2 year, then 4×2 = 8 times charged in 2 year.