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

A) Rs.8600 B) Rs.8830
C) Rs.8500 D) Rs.8820
 
Answer & Explanation Answer: D) Rs.8820

Explanation:

Amount

=Rs.[8000x(1+5/100)²]

= Rs.[8000 x 21/20x21/20]

= Rs.8820. 

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4 8327
Q:

In what time will Rs.1000 become Rs.1331 at 10% per annum compounded annually?

A) 2years B) 3years
C) 4years D) 5years
 
Answer & Explanation Answer: B) 3years

Explanation:

Principal = Rs.1000;

Amount = Rs.1331;

Rate = Rs.10%p.a.

 

Let the time be n years.Then

[1000(1+10/100)Λn;]

= 1331.

= (1331/1000)

= (11/10)³

 

Therefore n = 3 years.

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3 7350
Q:

A five-year promissory note with a face value of $3500, bearing interest at 11%  compounded semiannually, was sold 21 months after its issue date to yield the buyer 10% compounded quarterly.What amount was paid for the note

A) 4336.93 B) 5336
C) 6336 D) 7336
 
Answer & Explanation Answer: A) 4336.93

Explanation:

i=j/m

Maturity value = PV(1 + i)^n

Term = 5 years - 21 months=  3.25 years

Price paid = FV(1+ i )^-n

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7 7232
Q:

Find the C.I. on Rs. 15,225 for 9 months at 16% per annum compounded quarterly ?

A) Rs. 1911 B) Rs. 1909
C) Rs. 1901 D) Rs. 1907
 
Answer & Explanation Answer: C) Rs. 1901

Explanation:

P = Rs. 15225, n = 9 months = 3 quarters, R = 16% p.a. per quarter.

 

Amount = 15225x1+41003

 

= (15225 x 26/25 x 26/25 x 26/25) = Rs. 17126.05

 

=> C.I. = 17126 - 15625 = Rs. 1901.05.

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10 7169
Q:

What would be the least number of years in which the simple interest on Rs.2600 at % will be an exact number of rupees ?

A) 2 B) 3
C) 4 D) 5
 
Answer & Explanation Answer: B) 3

Explanation:

 S.I=Rs.2600*203*1100*t

 S.I=Rs.5203*t

 t=3

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6 7163
Q:

The compound interest on Rs. 30,000 at 7% per annum is Rs. 4347. The period (in years) is

A) 2years B) 3years
C) 4years D) 5years
 
Answer & Explanation Answer: A) 2years

Explanation:

 

 

 

Amount = Rs(30000 + 4347) = Rs.34347.

 

 

 

Let the time be n years. Then,

 

 300001+7100n=34347

 

 

 

107100n=3434730000=1144910000=1071002

 

 

 

n= 2years.

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1 6986
Q:

An amount of money was lent for 3 years. What will be the difference between the simple  and the compound interest earned on it at the same rate?
I. The rate of interest was 8 p.c.p.a.
II. The total amount of simple interest was Rs. 1200

A) I alone sufficient while II alone not sufficient to answer B) alone sufficient while I alone not sufficient to answer
C) Both I and II are not sufficient to answer D) Both I and II are necessary to answer
 
Answer & Explanation Answer: D) Both I and II are necessary to answer

Explanation:

Given: T = 3 years.
I. gives: R = 8% p.a.
II. gives: S.I. = Rs. 1200.
Thus, P = Rs. 5000, R = 8% p.a. and T = 3 years.
Difference between C.I. and S.I. may be obtained.
So, the correct answer is (D).

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0 6833
Q:

Compound interest on a certain sum of money at 20% per annum for 2 years is Rs.5995. What is the SI on the same money at 8% per annum for 6 years ?

A) Rs. 5989 B) Rs. 6540
C) Rs. 7844 D) Rs. 6789
 
Answer & Explanation Answer: B) Rs. 6540

Explanation:

Given C.I = 5984, R = 20% , T = 2yrs

 C.I = P1+201002-1

 

5984 = 

 

=> P = (5995x25)/11

 

P = Rs. 13625

 

Now S.I = PTR/100

 

SI = (13625 x 8 x 6)/100 = Rs. 6540

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22 6699