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

Q:

What is the rate of compound interest?
I. The principal was invested for 4 years.
II. The earned interest was Rs. 1491.

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) Either I or II alone sufficient to answer

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

Explanation:

Let Principal = Rs. P and Rate = R% p.a. Then,

Amount= $R s . [P {(1 + \frac{R}{100})}^{4}]$

C.I = $P [{(1 + \frac{R}{100})}^{4} - 1]$

$P [{(1 + \frac{R}{100})}^{4} - 1] = 1491$

Clearly, it does not give the answer

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Q:

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

Explanation:

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 = $R s . \frac{100 * 200}{8 * 1}$ = Rs.2500

Amount for 2 years, compounded half-yearly

$R s . [2500 * {(1 + \frac{4}{100})}^{4}] = R s . 2924.4$

C.I = Rs.424.64

Also, $S . I = R s . (\frac{2500 * 8 * 2}{100}) = R s . 400$

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

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Q:

The difference between the simple interest on a certain sum at the rate of 10%per annum for 2 years and compound interest which is compounded every 6 months is Rs.124.05. what is the principal sum

A) Rs.6000	B) Rs.8000
C) Rs.12000	D) none of these

Answer & Explanation Answer: B) Rs.8000

Explanation:

Compound Interest on P at 10% for 2 years when interest is compounded half-yearly

= $P {(1 + \frac{\frac{R}{2}}{100})}^{2 T} - P = P {(1 + \frac{1}{20})}^{4} - P = P {(\frac{21}{20})}^{4} - P$

Simple Interest on P at 10% for 2 years = $\frac{P R T}{100} = \frac{P \times 10 \times 2}{100} = \frac{P}{5}$

Given that difference between compound interest and simple interest = 124.05

$P * {(\frac{21}{20})}^{4} - P - \frac{P}{5} = 124.05$

=> $P [{(\frac{21}{20})}^{4} - 1 - \frac{1}{5}] = 124.05$

P=8000

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Q:

The compound interest on a sum of money for 2 years is rs.832 and the simple interest on the same sum for the same period is rs.800 .the difference between the compound interest and simple interest for 3 years

A) Rs.48	B) Rs.66.56
C) Rs.98.56	D) None of these

Answer & Explanation Answer: C) Rs.98.56

Explanation:

difference in C.I and S.I in 2years =Rs.32

S.I for 1year =Rs.400

S.I for Rs.400 for one year =Rs.32

rate=[100*32)/(400*1)%=8%

difference between in C.I and S.I for 3rd year

=S.I on Rs.832= Rs.(832*8*1)/100=Rs.66.56

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Q:

The difference between simple and compound interest compounded annually on a certain sum of money for 2 years at 4% per annum is re.1. the sum is

A) 625	B) 630
C) 640	D) 650

Answer & Explanation Answer: A) 625

Explanation:

sum=Rs.x

C.I=[x(1+4/100)^2-x]=(676/625x-x)=51/625

S.I=(x*4*2)/100=2x/25

x=625

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Q:

The difference between the compound interest and simple interest on an amount of Rs.15000 for two years is Rs.96. what is the rate of interest per annum

A) 8	B) 10
C) 12	D) 13

Answer & Explanation Answer: A) 8

Explanation:

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

r=8

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Q:

The compound interest on Rs. 30,000 at 7% per annum is Rs. 4347. The period (in years) is:

A) 3years	B) 2years
C) 4years	D) 6years

Answer & Explanation Answer: B) 2years

Explanation:

Amount = Rs. (30000 + 4347) = Rs. 34347.

Let the time be n years.

Then, 30000*(1+7/100)^n=34347

n= 2 years

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Q:

What is the difference between the compound interests on Rs. 5000 for $1 \frac{1}{2}$ years at 4% per annum compounded yearly and half-yearly?

A) Rs.3.06	B) Rs.2.04
C) Rs.3.65	D) Rs.5.40

Answer & Explanation Answer: B) Rs.2.04

Explanation:

C.I. when interest compounded yearly

$R s . [5000 * (1 + \frac{4}{100}) * (1 + \frac{\frac{1}{2} * 4}{100})]$

$R s . [5000 * \frac{26}{25} * \frac{51}{50}]$

=Rs.5034

C.I. when interest iscompounded half-yearly

$R s . [5000 * {(1 + \frac{2}{100})}^{3}]$

= Rs. 5306.04

Difference = Rs. (5306.04 - 5304) = Rs. 2.04

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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