# An amount of #AUD500# is invested in a bank at compound interest?

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(a) at #6%# p.a. at quarterly rests for #3# years, then what is the interest earned?

(b) In another bank, the interest received is same but at an annually compounding rate, then what is the interest rate paid?

(a) at

(b) In another bank, the interest received is same but at an annually compounding rate, then what is the interest rate paid?

##### 1 Answer

(a) Interest earned is

(b) Second bank offers

#### Explanation:

If an amount

the total amount becomes

if it is compounded more frequently, say

As here, interest is compounded quarterly at

of

=

Now let us say he earns a rate of

Then as the amount would be

or

or

and