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 Compound Interest Questions

Popular Latest Rated Important Formulae

FACTS  AND  FORMULAE  FOR  COMPOUND  INTEREST  QUESTIONS

 

 

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

I.

1.  When interest is compound Annually:

Amount =P1+R100n

2.  When interest is compounded Half-yearly:

Amount = P1+(R2)1002n

3.  When interest is compounded Quarterly:

Amount = P1+R41004n

 

II.

1.  When interest is compounded Annually but time is in fraction, say 325 years.

Amount = P1+R1003×1+25R100

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

Then, Amount = P1+R11001+R21001+R3100

 

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

Present Worth = x1+R100n

Q:

A woman invests Rs. 2000 at the start of each year at 5% C.I. per annum. How much will her investments be at the end of the 2nd year?

A) Rs. 4305 B) Rs. 430
C) Rs. 4355 D) Rs. 4350
 
Answer & Explanation Answer: A) Rs. 4305

Explanation:
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14 2443
Q:

A certain sum is invested for 2 years in scheme M at 20% p.a. compound interest (compounded annually), Same sum is also invested for the same period in scheme N at k% p.a. simple interest. The interest earned from scheme M is twice of that earned from scheme N. What is the value of k?

A) 7 B) 11
C) 9 D) 13
 
Answer & Explanation Answer: B) 11

Explanation:

Interest earned in scheme M =   

P1 + 201002  - 1  = 11P25

Interest earned in scheme N =  

P x k x 2100 = Pk50

 

Now, from the given data,

 

11P25 = 2 x Pk50

k = 11

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20 2323
Q:

Calculate the amount on Rs. 1875 for 2 year at 4% per annum, compounded yearly.

A) Rs. 676 B) Rs. 776
C) Rs. 1778 D) Rs. 2028
 
Answer & Explanation Answer: D) Rs. 2028

Explanation:

Amount = P(1 + r/100)^t
Amount = 1875(1 + 4/100)^2
Amount = 1875(104/100)(104/100)
Amount = 2028

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9 2261
Q:

A bank offers 15% compound interest per half year. A customer deposits Rs 8800 each on 1st January and 1st July of a year. At the end of the year, the amount he would have gained by way of interest is _____.

A) Rs 8315 B) Rs 2079
C) Rs 4158 D) Rs 1039
 
Answer & Explanation Answer: C) Rs 4158

Explanation:
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3 2155
Q:

An article costs Rs 50 presently. The rate of inflation is 300%. What will be cost of this article after two years?

A) Rs 200 B) Rs 600
C) Rs 800 D) Rs 1000
 
Answer & Explanation Answer: C) Rs 800

Explanation:

A = P(1 + r/100)n   ⇒50(1 + 300/100)2   ⇒50(4)2  ⇒800

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5 1806
Q:

A bank offers 15% compound interest per half year. A customer deposits Rs 2400 each on 1st January and 1st July of a year. At the end of the year, the amount he would have gained by way of interest is

A) Rs 2268 B) Rs 1134
C) Rs 567 D) Rs 283
 
Answer & Explanation Answer: B) Rs 1134

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4 1495
Q:

A sum of money is invested at 20% compound interest (compounded annually). It would fetch Rs. 723 more if interest is compounded half-yearly. The sum

A) Rs.15,000 B) Rs.30,000
C) Rs.20,000 D) Rs.7,500
 
Answer & Explanation Answer: B) Rs.30,000

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3 1470
Q:

If the amount on a certain principal in 3 years at 12% rate of interest compounded annually is Rs 12,000, what will be the amount (in Rs) after the 4th year?

A) 14330 B) 15440
C) 13440 D) 14550
 
Answer & Explanation Answer: C) 13440

Explanation:
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