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 Compound Interest Questions

Popular Latest Rated Important Formulae

FACTS  AND  FORMULAE  FOR  COMPOUND  INTEREST  QUESTIONS

 

 

Let Principal = P, Rate = R% per annum, Time = n years.

I.

1.  When interest is compound Annually:

Amount =P1+R100n

2.  When interest is compounded Half-yearly:

Amount = P1+(R2)1002n

3.  When interest is compounded Quarterly:

Amount = P1+R41004n

 

II.

1.  When interest is compounded Annually but time is in fraction, say 325 years.

Amount = P1+R1003×1+25R100

2.  When Rates are different for different years, say R1%, R2%, R3% for 1st, 2nd and 3rd year respectively.

Then, Amount = P1+R11001+R21001+R3100

 

III.  Present worth of Rs. x due n years hence is given by:

Present Worth = x1+R100n

Q:

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

A) Rs. 8840 B) Rs. 8800
C) Rs. 8810 D) None
 
Answer & Explanation Answer: D) None

Explanation:

Amount = 80001+51002

 

= 8000 x 21/20 x 21/20 

 

= Rs. 8820

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6 6373
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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2 6329
Q:

Josh borrowed $250 from his mother to buy an electric scooter. Josh will pay her back in 1 year with 3% simple annual interest. How much interest will Josh pay?

A) 7.50 B) 8.50
C) 9.50 D) 10.50
 
Answer & Explanation Answer: A) 7.50

Explanation:

I=prt/100

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Q:

The compound interest on a certain sum for 2 years at 10% per annum is Rs. 1155. The simple interest on the same sum for double the time at half the rate percent per annum is ?

A) Rs. 1100 B) Rs. 5500
C) Rs. 1400 D) Rs. 4120
 
Answer & Explanation Answer: A) Rs. 1100

Explanation:

Let the sum be Rs.x. Then, 

 

 x1+101002-x=1155

 

⇒x11102-1=1155

 

=> x =5500

 

sum = Rs. 5500.

 

So, S.I = Rs. 5500×5×4100 = 1100

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2 6135
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.1650 B) Rs.1550
C) Rs.1750 D) Rs.1850
 
Answer & Explanation Answer: C) Rs.1750

Explanation:

C.I. =Rs[4000x(1+10/100)²-4000]

Rs.(4000x11/10x11/10-4000) = Rs.940.

Sum

=Rs. [420 *100 /3 * 8]

= Rs.1750.

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3 5855
Q:

Find compound interest on Rs. 7500 at 4% per annum for 2 years, compounded annually

A) Rs.512 B) Rs.515
C) Rs.612 D) Rs.522
 
Answer & Explanation Answer: C) Rs.612

Explanation:

Amount

= Rs[7500x(1+4/100)²]

=Rs.(7500 * 26/25 * 26/25)

=Rs.8112

 

 C.I

= Rs(8112 - 7500)

=Rs.612

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3 5815
Q:

You deposit $300 in a savings account that pays 4% simple annual interest. Find your account balance after 9 months.

A) 309 B) 409
C) 609 D) 509
 
Answer & Explanation Answer: A) 309

Explanation:

A = P + Prt

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5 5771
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= Rs.P1+R1004

 

 C.I = P1+R1004-1

 P1+R1004-1=1491

 

Clearly, it does not give the answer

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