Compound Interest Questions




Let Principal = P, Rate = R% per annum, Time = n years.


1.  When interest is compound Annually:

Amount =

2.  When interest is compounded Half-yearly:

Amount = 

3.  When interest is compounded Quarterly:

Amount = 



1.  When interest is compounded Annually but time is in fraction, say 3 years.

Amount = 

2.  When Rates are different for different years, say R1%, R2%, R3% for 1st, 2nd and 3rd year respectively.

Then, Amount = 


III.  Present worth of Rs. x due n years hence is given by:

Present Worth = 


A sum of money lent at compound interest for 2 years at 20% per annum would fetch Rs.482 more, if the interest was payable half yearly than if it was payable annually . The sum is

A) 10000 B) 20000
C) 40000 D) 50000
Answer & Explanation Answer: B) 20000


Let sum=Rs.x

C.I. when compounded half yearly = 

C.I. when compounded annually =

=> x=20000

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72 17575

Find compound interest on Rs. 8000 at 15% per annum for 2 years 4 months, compounded annually

A) 2109 B) 3109
C) 4109 D) 6109
Answer & Explanation Answer: B) 3109


Time = 2 years 4 months = 2(4/12) years = 2(1/3) years.
Amount = Rs'. [8000 X (1+(15/100))^2 X (1+((1/3)*15)/100)]
=Rs. [8000 * (23/20) * (23/20) * (21/20)]
= Rs. 11109. .
:. C.I. = Rs. (11109 - 8000) = Rs. 3109.

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37 15090

A sum of money amounts to Rs.6690 after 3 years and to Rs.10,035 after 6 years on compound interest.find the sum.

A) 4360 B) 4460
C) 4560 D) 4660
Answer & Explanation Answer: B) 4460


Let the sum be Rs.P.then
P(1+R/100)^3=6690…(i) and P(1+R/100)^6=10035…(ii)
On dividing,we get (1+R/100)^3=10025/6690=3/2.
Substituting this value in (i),we get:
P*(3/2)=6690 or P=(6690*2/3)=4460
Hence,the sum is rs.4460.

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36 12285

What is the rate of interest p.c.p.a.?

I. An amount doubles itself in 5 years on simple interest.

II. Difference between the compound interest and the simple interest earned on a certain amount in 2 years is Rs. 400.

III. Simple interest earned per annum is Rs. 2000

A) I only B) II and III only
C) All I, II and III D) I only or II and III only
Answer & Explanation Answer: D) I only or II and III only


Thus I only or (II and III) give answer.

 Correct answer is (D)

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26 10738

The difference between compound interest and simple interest on a sum for two years at 8% per annum, where the interest is compounded annually is Rs.16. if the interest were compounded half yearly , the difference in two interests would be nearly

A) Rs.24.64 B) Rs.21.85
C) Rs.16 D) Rs.16.80
Answer & Explanation Answer: A) Rs.24.64


For 1st year S.I =C.I.

Thus, Rs.16 is the S.I. on S.I. for 1 year, which at 8% is thus Rs.200

i.e S.I on the principal for 1 year is Rs.200

Principle =  = Rs.2500

Amount for 2 years, compounded half-yearly

C.I = Rs.424.64


Hence, [(C.I) - (S.I)] = Rs. (424.64 - 400) = Rs.24.64

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18 10580