A bank pays 10% per annum on savings accounts. Interest is credited quarterly on March 31, June 30, September 30, and December 31, bassed on the minimum quarterly balance. If a person opens an account with a deposit of 200$ on January 1 and withdraws 100$ on August 8, how much interest is earned in the first year? Ans; 15.70.
| Annual rate of interest = 10% | |||||||||
| Quarterly rate = 10/4 = 2.50% | |||||||||
| Interest In each Quarter credited | |||||||||
| Q-1 | 200*2.5% = | 5 | Balance at end = 200+5 =205 | ||||||
| Q-2 | 205*2.5% | 5.125 | balance at end = 205+5.125 = 210.125 | ||||||
| Q-3 | (210.125-100) *2.5% | 2.75 | Balance at end = 210.125-100+2.75 = 112.875 | ||||||
| Q-4 | (112.875*2.50%) | 2.82 | balance at end = 112.875+2.82 = 115.695 | ||||||
| TOTAL | 15.695 | ||||||||
| Hence, | |||||||||
| Total Interest = 15.695 | |||||||||
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