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:

A sum of Rs 8000 becomes Rs 12500 in 2 years at a certain rate of compound interest. What will be the sum (in Rs) after 3 years?

 

A) 13175   B) 14225
C) 12575 D) 15625
 
Answer & Explanation Answer: D) 15625

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Q:

If the interest is compounded half-yearly, then what will be the compound interest (in Rs) on a sum of Rs 10000 for 1 year at the rate of 10% per annum?

A) 1250 B) 525
C) 1000 D) 1025
 
Answer & Explanation Answer: D) 1025

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Q:

A sum of Rs 8000 is borrowed at compound interest at the rate of 7% per annum. What will be the amount (in Rs) after 2 years?

 

A) 1154.4   B) 13600  
C) 9159.2   D) 9428.6
 
Answer & Explanation Answer: C) 9159.2  

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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:

A sum of Rs 5000 becomes Rs 8000 in 3 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 yearly), then what will be the amount (in Rs) after 3 years?

 

A) 8640   B) 8260  
C) 8880   D) 9220
 
Answer & Explanation Answer: A) 8640  

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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 4000 at the rate of 30% per annum?

 

 

A) 976 B) 1024
C) 1188 D) 1276
 
Answer & Explanation Answer: C) 1188

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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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