Arun took a loan of Rs 390625 from Kuber Finance. If the company charges interest at 16% per annum, compounded quarterly, what amount will discharge his debt after one year?
Let the principal amount be $P=$ Rs 390625 .
Annual rate of interest, $R=16 \%$
Rate of interest for a quarter year $=\frac{16}{4} \%=4 \%$
Time, $n=1$ year $=4$ quarter years
Then the amount with the compound interest is given by
$A=$ Rs. $P \times\left(1+\frac{R}{100}\right)^{n}$
$=$ Rs. $390625 \times\left(1+\frac{4}{100}\right)^{4}$
$=$ Rs. $390625 \times\left(\frac{100+4}{100}\right)^{4}$
$=$ Rs. $390625 \times\left(\frac{104}{100}\right)^{4}$
$=$ Rs. $390625 \times\left(\frac{26}{25}\right)^{4}$
$=$ Rs. $390625 \times\left(\frac{26}{25}\right) \times\left(\frac{26}{25}\right) \times\left(\frac{26}{25}\right) \times\left(\frac{26}{25}\right)$
$=$ Rs. $(26 \times 26 \times 26 \times 26)$
$=$ Rs. 456976
Therefore, Arun has to pay Rs 456976 after 1 year.