Hello friends welcome to this session in this session let’s see what do we mean by different time periods for compounding, you have an example here, a sum of rupees 10000 is kept at 40% per annum compound interest. Find the total interest earned and total amount accrued at the end of year 1, if the compounding happens first annually then half yearly and then quarterly. What do you mean by annually half yearly and quarterly in case of annually the compounding happens only at the end of year that is in one year compounding will happen only once in half yearly yes it will happen every 6 months so in one year it will happen twice and in quarterly it will happen 4 times in a year let’s see how my rate of interest will change if the number of compounding period has changed. In annual the number of compounding will be one and the rate of interest will be 40% As given in the sum there in half yearly number of compounding will be 2 every 6 months and rate of interest as you can see is now 20% that is half of my annual rate of interest and interestingly in quarterly number of compounding is 4, rate of interest is one fourth of that my annual rate of interest that is 10% let’s see how to solve this sum.