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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 5818
Q:

A sum of Rs. 8,000 is deposited for 3 years at 5% per annum compound interest (compounded annually). The difference of interest for 3 years and 2 years will be

 

A) Rs. 387 B) Rs. 441
C) Rs. 469 D) Rs. 503
 
Answer & Explanation Answer: B) Rs. 441

Explanation:

Given principal amount = Rs. 8000

Time = 3yrs

Rate = 5%

C.I for 3 yrs = 8000 x 105100 x 105100 x 105100 - 8000= Rs. 1261

 

Now, C.I for 2 yrs = 8000 x 105100 x 105100= Rs. 820 

 

Hence, the required difference in C.I is 1261 - 820 = Rs. 441

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14 5802
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 5535
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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1 5521
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 5296
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 5228
Q:

Find the compound interest on Rs.16,000 at 20% per annum for 9 months, compounded quartely.

A) Rs.2522 B) Rs.2422
C) Rs.3522 D) Rs.2322
 
Answer & Explanation Answer: A) Rs.2522

Explanation:

Principal = Rs.16,000;

Time=9 months = 3 quarters;

Amount

=Rs.[16000x(1+5/100)³] =[16000x21/20x21/20x21/20]

= Rs.18522.

 

C.I

= Rs.(18522 - 16000)

= Rs.2522.

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0 5081
Q:

The difference between simple and compound interests compounded annually on a certain sum of money for 2 years at 4% per annum is Re. 1. The sum (in Rs.) is:

A) 625 B) 635
C) 645 D) 655
 
Answer & Explanation Answer: A) 625

Explanation:

Let the sum be Rs. x. Then

C.I=x[1+4/100)^2-x]=[626/675x-x]

S.I=x^2/25

C.I-S.I=1

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0 4970