What is the compound interest earned on Rs 16,000 over 9 months at an annual interest rate of 20%, compounded quarterly?

Explanation

Given principal (P) = Rs 16,000, annual rate (R) = 20%, compounded quarterly, the quarterly rate is 5% (20% ÷ 4). The time period of 9 months equals 3 quarters. Compound interest is calculated as: CI = P × (1 + r)^n - P = 16000 × (1 + 0.05)^3 - 16000 = 16000 × (1.157625) - 16000 = Rs 2522.