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Q:

Find the present worth of a bill of Rs.28000 due 2 years at 12% compound interest. Also find the true discount.

A) 300 B) 350
C) 250 D) 275
 
Answer & Explanation Answer: A) 300

Explanation:

PW = Amount1+R100T=28001+121002   = Rs.2500 

 

TD = Amount - PW = 2800 - 2500 = Rs.300

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Q:

The difference between the compound interest and the simple interest on a certain sum at 12% p.a. for two years is Rs.90. What will be the value of the amount at the end of 3 years?

A) 8560 B) 8673
C) 8746 D) 8780.80
 
Answer & Explanation Answer: D) 8780.80

Explanation:

when interest is reckoned using compound interest, interest being compounded annually. The difference in the simple interest and compound interest for two years is on account of the interest paid on the first year's interest  Hence 12% of simple interest = 90 => simple interest =90/0.12 =750.

As the simple interest for a year = 750 @ 12% p.a., the principal =750/0.12 = Rs.6250.

If the principal is 6250, then the amount outstanding at the end of 3 years = 6250 + 3(simple interest on 6250) + 3 (interest on simple interest) + 1 (interest on interest on interest) = 6250 +3(750) + 3(90) + 1(10.80) = 8780.80.

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Q:

A man invests Rs.5000 for 3 years at 5% p.a. compound interest reckoned yearly. Income tax at the rate of 20% on the interest earned is deducted at the end of each year. Find the amount at the end of the third year

A) Rs.5624.32 B) Rs.5423
C) Rs.5634 D) Rs.5976
 
Answer & Explanation Answer: A) Rs.5624.32

Explanation:

 

 

 

5% is the rate of interest. 20% of the interest amount is paid as tax.

 

i.e  80% of the interest amount stays back.

 

 if we compute the rate of interest as 80% of 5% = 4% p.a., we will get the same value.

  

The interest accrued for 3 years in compound interest = 3 x simple interest on principal + 3 x interest on simple interest + 1 x interest on interest on interest.

 

= 3 x (200) + 3 x (8) + 1 x 0.32 =600 + 24 + 0.32 = 624.32

 

 

 

The amount at the end of 3 years = 5000 + 624.32 = 5624.32

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Q:

The population of a town was 3600 three years back. It is 4800 right now. What will be the population three years down the line, if the rate of growth of population has been constant over the years and has been compounding annually?

A) Rs.600 B) Rs,6400
C) Rs.6500 D) Rs.6600
 
Answer & Explanation Answer: B) Rs,6400

Explanation:

 

The population grew from 3600 to 4800 in 3 years. That is a growth of 1200 on 3600 during three year span.

 

Therefore, the rate of growth for three years has been constant.

 

The rate of growth during the next three years will also be the same.

 

Therefore, the population will grow from 4800 by 4800*13= 1600

 

Hence, the population three years from now will be 4800 + 1600 = 6400

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Q:

What will Rs.1500 amount to in three years if it is invested in 20% p.a. compound interest, interest being compounded annually?

A) Rs.2592 B) Rs.2492
C) Rs.2352 D) Rs.2352
 
Answer & Explanation Answer: A) Rs.2592

Explanation:

The usual way to find the compound interest is given by the formula A = .p(1+r/100)^n

In this formula,

A is the amount at the end of the period of investment

P is the principal that is invested

r is the rate of interest in % p.a

And n is the number of years for which the principal has been invested.

In this case, it would turn out to be A =1500(1+20/100)^3

= 2592.

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Q:

The compound interest on a certain sum for 2 years at 10% per annum is Rs. 525. The simple interest on the same sum for double the time at half the rate percent per annum is

A) Rs.4000 B) Rs.500
C) Rs.600 D) Rs.800
 
Answer & Explanation Answer: B) Rs.500

Explanation:

Let the sum be Rs. P.

Then,[p(1+10/100)2-p]=525

Sum =Rs.2500

S.I.= Rs.(2500*5*4)/100


= Rs. 500

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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 present worth of Rs.1404 due in two equal half-yearly instalments at 8% per annum. Simple interest is:

A) 1320 B) 1300
C) 1325 D) 1200
 
Answer & Explanation Answer: C) 1325

Explanation:

Required Sum = PW of Rs.702 due 6 months hence + PW of Rs.702 due 1 year hence 

= Rs.[ (100 x 702) / (100+(8 x 1/2)) ] + [ (100 x 702) / (100+(8 x 1)) ]  

= Rs.1325

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