Simple Interest Questions

FACTS  AND  FORMULAE  FOR  SIMPLE  INTEREST  QUESTIONS

1. Principal: The money borrowed or lent out for a certain period is called the principal or the sum.

2. Interest: Extra money paid for using other's money is called interest

3. Simple Interest (S.I.) : If the interest on a sum borrowed for a certain period is reckoned uniformly, then it is called simple interest.

Let Principal = P, Rate = R% per annum (p.a.) and Time = T years. Then,

(i)  $S.I=\left(\frac{P×T×R}{100}\right)$

(ii)

Q:

At what rate percent per annum will a sum of money double in 8 years.

 A) 12.5% B) 13.5% C) 11.5% D) 14.5%

Explanation:

Let principal = P, Then, S.I.= P and Time = 8 years

We know that S.I. = PTR/100

Rate = [(100 x P)/ (P x 8)]% = 12.5% per annum.

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456 75439
Q:

A man took loan from a bank at the rate of 12% p.a. simple interest. After 3 years he had to pay Rs. 5400 interest only for the period. The principal amount borrowed by him was:

 A) Rs.2000 B) Rs.10000 C) Rs.15000 D) Rs.20000

Explanation:

Principal =

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162 68577
Q:

A sum of money at simple interest amounts to Rs. 815 in 3 years and to Rs. 854 in 4 years. The sum is:

 A) 650 B) 690 C) 698 D) 700

Explanation:

S.I. for 1 year =  Rs. (854 - 815) = Rs. 39.

S.I. for 3 years = Rs.(39 x 3) = Rs. 117.

Principal = Rs. (815 - 117) = Rs. 698

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247 50213
Q:

How much time will take for an amount of Rs. 450 to yield Rs. 81 as interest at 4.5% per annum of simple interest  ?

 A) 4 years B) 2.5 years C) 3.5 years D) 2 years

Explanation:

Time = (100 x 81) / (450 x 4.5) = 4 years.

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104 49879
Q:

What annual instalment will discharge a debt of Rs 1092 due in 3 years at 12% simple interest?

 A) Rs.325 B) Rs.545 C) Rs.560 D) Rs.550

Explanation:

Let each instalment be Rs.x .

1st year =  [x + (x * 12 * 2)/100]

2nd year = [ x + (x *12 * 1)/100]

3rd year = x

Then, [x + (x * 12 * 2)/100] + [ x + (x *12 * 1)/100] + x =1092

3x + ( 24x/100 ) + ( 12x/100 )  = 1092

336x =109200

Therefore, x = 325

Each instalment = Rs. 325

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Exam Prep: GRE

198 47478
Q:

A certain sum of money amounts to Rs 1008 in 2 years and to Rs 1164 in 3 ½  years. Find the sum and the rate of interest.

 A) 800, 14% B) 800, 13% C) 800, 12% D) 800, 19%

Explanation:

S.I. for 1 ½ years = Rs (1164 - 1008) = Rs 156 .

S.I. for 2 years = Rs (156 x $23$ x 2)= Rs 208.

Therefore, Principal = Rs (1008 - 208) = Rs 800.

Now, P = 800, T= 2 and S.I. = 208.

Therefore, Rate = (100 x S.I.) / (P x T) = [ (100 x 208)/(800 x 2)]% = 13%

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Exam Prep: GRE

136 46986
Q:

A person borrows Rs. 5000 for 2 years at 4% p.a. simple interest. He immediately lends it to another person at $614$ p.a for 2 years. Find his gain in the transaction per year

 A) Rs. 112.50 B) Rs.150.25 C) Rs.167.50 D) Rs.170

Explanation:

= Rs. (625 - 400)

= Rs. 225

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114 41502
Q:

A sum was put at simple interest at a certain rate for 3 years. Had it been put at 2% higher rate, it would have fetched Rs 360 more. Find the sum.

 A) Rs.4000 B) Rs.9000 C) Rs.5000 D) Rs.6000

Explanation:

Let sum = P and original rate = R. Then

[(P * (R+2) * 3)/100] - [ (P * R * 3)/100] = 360

3P*(R+2) - 3PR = 36000

3PR + 6P - 3PR = 36000

6P = 36000

P = 6000