Answer:
The amount to be paid is rupee 1872.72
Step-by-step explanation:
Compound Interest
It occurs when interest in the next period is earned on the principal sum plus previously accumulated interest.
The formula is:
[tex]\displaystyle A=P\left(1+{\frac {r}{n}}\right)^{nt}}[/tex]
Where:
A = final amount
P = initial principal balance
r = interest rate
n = number of times interest applied per time period
t = number of time periods elapsed
The initial amount is P=1800 at r=8% = 0.08 during t=6 months (t=0.5 years) compounded quarterly. There are 4 quarters in a year, thus n=4.
Calculating A:
[tex]\displaystyle A=1800\left(1+{\frac {0.08}{4}}\right)^{4*0.5}[/tex]
[tex]\displaystyle A=1800(1.02)^{2}[/tex]
A = 1872.72
The amount to be paid is rupee 1872.72
