299+ Compound Interest Questions and Answers

Q:

The difference between simple interest and compound on Rs. 1200 for one year at 10% per annum reckoned half-yearly is

A) Rs.2	B) Rs.3
C) Rs.4	D) Rs.5

Answer & Explanation Answer: B) Rs.3

Explanation:

S.I. = Rs.(1200*10*1)/100=rs.120

C.I. =rs[1200*(1+5/100)2-1200]=rs.123

Difference = Rs.(123-120) =Rs.3

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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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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,

$[x {(1 + \frac{10}{100})}^{2} - x] = 1155$

$\Rightarrow x [{(\frac{11}{10})}^{2} - 1] = 1155$

=> x =5500

sum = Rs. 5500.

So, S.I = Rs. $(\frac{5500 \times 5 \times 4}{100})$ = 1100

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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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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= $R s . [P {(1 + \frac{R}{100})}^{4}]$

C.I = $P [{(1 + \frac{R}{100})}^{4} - 1]$

$P [{(1 + \frac{R}{100})}^{4} - 1] = 1491$

Clearly, it does not give the answer

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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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Q:

How much money would you need to deposit today at 9% annual interest compounded monthly to have $12000 in the account after 6 years?

A) 9007	B) 4007
C) 7007.08	D) 8oo7

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