An investment of Rs. 1000 is carrying an interest of 10% compounded quarterly. The value of the investment at the end of five years will be ________________?
Correct answer: A. 1000 (1 + 0.1/4)20
- A. 1000 (1 + 0.1/4)20
- B. 1000 (1 + 0.1)20
- C. 1000 (1 + 0.1/4)5
- D. 1000 (1 + 0.1/2)5
Explanation
Five years at quarterly compounding gives 5 × 4 = 20 compounding periods. Using the nominal annual rate of 10%, the accumulation expression is 1000(1 + 0.1/4)²⁰.
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