Discussion

Explanation:

We know, 
P1+R/n100(n×t)= P1+Er100t

Since interest is compounded quarterly, n = 4 and t = 1, R = 40% and Er = effective rate of interest.

⇒ P1+40/41004= P1+Er1001

⇒ (1.1)4 = (1 + Er/100)

⇒ 1.4641 = 1 + Er/100

⇒ Er = 46.41% 

Hence, option (b).

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