1
Q:

# Find the effective rate of interest for an investment that earns 5 1/2% per year, compounded continuously

 A) 5.65% B) 5.75% C) 5.85% D) 5.95%

Answer:   A) 5.65%

Explanation:

We are not given a value of P in this problem, so either pick a value

for P and stick with that throughout the problem, or just let P = P.

We have that t = 1, and r = .055. To find the effective rate of interest,

first find out how much money we have after one year:

A = Pert

A = Pe(.055)(1)

A = 1.056541P.

Therefore, after 1 year, whatever the principal was, we now have 1.056541P.

Next, find out how much interest was earned, I, by subtracting the initial amount of money from the final amount:

I = A − P

= 1.056541P − P

= .056541P.

Finally, to find the effective rate of interest, use the simple interest formula, I = Prt. So,

I = Pr(1) = .056541P

.056541 = r.

Therefore, the effective rate of interest is 5.65%

Subject: Compound Interest
Exam Prep: Bank Exams
Job Role: Bank PO
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If Rs. 2,000 is invested at the rate of 20% per annum, compounded half-yearly, then the amount after 18 months will be:

 A) Rs.2628 B) Rs.2662 C) Rs.2600 D) Rs.3200

Answer & Explanation Answer: D) Rs.3200

Explanation:
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3 765
Q:

Calculate the principal if an amount of Rs. 441 is received on compound interest at the rate of 5% per annum after 2 years.

 A) Rs.400 B) Rs.390 C) Rs.380 D) Rs.350

Answer & Explanation Answer: A) Rs.400

Explanation:
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2 550
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Gitesh took a loan for 4 years at 5% Compound Interest. If the total interest paid was Rs. 431.01, Calculate the principal.

 A) Rs. 2000 B) Rs. 2050 C) Rs. 2100 D) Rs. 2150

Answer & Explanation Answer: A) Rs. 2000

Explanation:
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0 534
Q:

A sum of Rs 20000 becomes Rs 32000 in 12 years, when invested in a scheme of simple interest. If the same sum is invested in a scheme of compound interest with same yearly interest rate (compounding of interest is done yearly), then what will be the amount (in Rs) after 2 years?

 A) 21750 B) 22050 C) 23250 D) 24650

Answer & Explanation Answer: B) 22050

Explanation:
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0 431
Q:

A sum of Rs 4000 becomes Rs 5800 in 3 years, when invested in a scheme of simple interest. If the same sum is invested in a scheme of compound interest with same yearly interest rate (compounding of interest is done yearly), then what will be the amount (in Rs) after 2 years?

 A) 4430 B) 5450 C) 5290 D) 4970

Answer & Explanation Answer: C) 5290

Explanation:
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1 493
Q:

The maturity value of a certain sum after two years at 20% p.a. interest compounded annually is Rs. 14,400/-. Find the Principal amount.

 A) Rs.9000 B) Rs.9500 C) Rs.10,000 D) Rs.10,500

Answer & Explanation Answer: C) Rs.10,000

Explanation:
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1 465
Q:

Shams invested Rs. 5000 at 10% per annum compound interest. After n years, Shams received Rs. 1655 more. Find the value of n.

 A) 3 years B) 4 years C) 2 years D) 1 year

Answer & Explanation Answer: A) 3 years

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4 975
Q:

A sum of Rs 6000 becomes Rs 7200 in 2 years, when invested in a scheme of simple interest. If the same sum is invested in a scheme of compound interest with same yearly interest rate (compounding of interest is done yearly), then what will be the amount (in Rs) after 3 years?

 A) 7434 B) 8244 C) 7864 D) 7986

Answer & Explanation Answer: D) 7986

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3 615