Compound Interest Questions

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:

What is the compound interest on Rs. 48,000 for 2 years at 20% p.a., if interest is compounded annually?

A) Rs. 69,120 B) Rs. 21,120
C) Rs. 76,800 D) Rs. 72,000
 
Answer & Explanation Answer: B) Rs. 21,120

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Q:

The difference between simple and compound interests compounded annually on a certain sum of money for 2 years at 18% per annum is Rs 81. The sum is ____.

A) Rs 2500 B) Rs 5000
C) Rs 10000 D) Rs 7500
 
Answer & Explanation Answer: A) Rs 2500

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Q:

The difference between simple and compound interests compounded annually on a certain sum of money for 2 years at 12% per annum is Rs 900. What is the value of given sum (in Rs)?

A) 125000 B) 250000
C) 62500 D) 187500
 
Answer & Explanation Answer: C) 62500

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Q:

The amount (in Rs) received at 10% per annum compound interest after 3 yrs is Rs 1,19,790. What was the principal?

A) 90000 B) 1,00,000
C) 80000 D) 75000
 
Answer & Explanation Answer: A) 90000

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Q:

The difference between the compound interest (compounding annually) and simple interest on a sum at the rate of 12% per annum for 2 years is Rs 360. What is the sum (in Rs)?

A) 27000 B) 32000
C) 30000 D) 25000
 
Answer & Explanation Answer: D) 25000

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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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Q:

What is the difference (in Rs) between compound interest (compounded annually) and simple interest for 3 years on a principal of Rs 3000 at the annual rate of 20%?

A) 464 B) 384
C) 356 D) 424
 
Answer & Explanation Answer: B) 384

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Q:

A bank offers 20% compound interest per half year. A customer deposits Rs 2800 each on 1st January and 1st July of a year. At the end of the year, the amount he would have gained by way of interest is ______.

A) Rs 3584 B) Rs 896
C) Rs 1792 D) Rs 448
 
Answer & Explanation Answer: C) Rs 1792

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