Determine the nominal rate of interest if: The pe | Compound Interest Questions & Answers

Q:

The difference between compound interest and simple interest on an amount of Rs. 15,000 for 2 years is Rs. 96. What is the rate of interest per annum?

A) 8	B) 10
C) 12	D) 14

Answer & Explanation Answer: A) 8

Explanation:

[15000*(1+r/100)2-15000]-(15000*r*2)/100=96

Rate=8%

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Q:

The difference between simple interest and compound on Rs. 1200 for one year at 10% per annum reckoned half-yearly is

A) Rs.2	B) Rs.3
C) Rs.4	D) Rs.5

Answer & Explanation Answer: B) Rs.3

Explanation:

S.I. = Rs.(1200*10*1)/100=rs.120

C.I. =rs[1200*(1+5/100)2-1200]=rs.123

Difference = Rs.(123-120) =Rs.3

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Q:

If the simple interest on a sum of money for 2 years at 5% per annum is Rs. 50, what is the compound interest on the same at the same rate and for the same time

A) Rs.51.25	B) Rs.61.25
C) Rs.51	D) Rs.42

Answer & Explanation Answer: A) Rs.51.25

Explanation:

Sum = Rs.(50*100)/2*5=Rs.500

Amount=Rs.[500*(1+5/100)2]

= Rs. 551.25

C.I = Rs.(551.25-500)= Rs.51.25

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Q:

Simple interest on a certain sum of money for 3 years at 8% per annum is half the compound interest on Rs. 4000 for 2 years at 10% per annum. The sum placed on simple interest is:

A) Rs.1550	B) Rs.1650
C) Rs,1750	D) Rs.1850

Answer & Explanation Answer: C) Rs,1750

Explanation:

C.I.= Rs.[4000*(1+10/100)^2-4000]

=Rs.840

sum=Rs.(420 * 100)/3*8=Rs.1750

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Q:

The effective annual rate of interest corresponding to a nominal rate of 6% per annum payable half-yearly is

A) 6.06%	B) 6.07%
C) 6.08%	D) 6.09%

Answer & Explanation Answer: D) 6.09%

Explanation:

Amount of Rs. 100 for 1 year

when compounded half-yearly = Rs.[100*(1+3/100)^2]=Rs.106.09

Effective rate=(106.09-100)%=6.09%

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Q:

Albert invested an amount of Rs. 8000 in a fixed deposit scheme for 2 years at compound interest rate 5 p.c.p.a. How much amount will Albert get on maturity of the fixed deposit

A) Rs.8820	B) Rs.8620
C) Rs.8520	D) Rs.8320

Answer & Explanation Answer: A) Rs.8820

Explanation:

Amount = $R s . [8000 * {(1 + \frac{5}{100})}^{2}]$ =Rs.8820

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Q:

The least number of complete years in which a sum of money put out at 20% compound interest will be more than doubled is:

A) 3	B) 4
C) 5	D) 6

Answer & Explanation Answer: B) 4

Explanation:

$P {(1 + \frac{20}{100})}^{n} > 2 P \Leftrightarrow {(\frac{6}{5})}^{n} > 2$

$(\frac{6}{5} \times \frac{6}{5} \times \frac{6}{5} \times \frac{6}{5}) > 2$

so, answer is 4 years

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Q:

What will be compounded amount?
I. Rs. 200 was borrowed for 192 months at 6% compounded annually.
II. Rs. 200 was borrowed for 16 years at 6%.

A) I alone sufficient while II alone not sufficient to answer	B) II alone sufficient while I alone not sufficient to answer
C) Either I or II alone sufficient to answer	D) Both I and II are not sufficient to answer

Answer & Explanation Answer: C) Either I or II alone sufficient to answer

Explanation:

I. Amount = $R s . [200 * {(1 + \frac{6}{100})}^{16}]$

II. Amount = $R s [200 * {(1 + \frac{6}{100})}^{16}]$

Thus, I as well as II gives the answer.

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A) 7%	B) 8%
C) 9%	D) 10%

Determine the nominal rate of interest if:

The periodic rate is 0.83% per month

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Determine the nominal rate of interest if: The periodic rate is 0.83% per month

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Determine the nominal rate of interest if:

The periodic rate is 0.83% per month