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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:

If an investment can earn 4% compounded monthly, what amount must you invest now in order to accumulate $10,000 after 3 years?

A) 8695.61 B) 6786
C) 3478 D) 4092
 
Answer & Explanation Answer: A) 8695.61

Explanation:

i=j/m

PV = FV (1+  i)^-n 

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0 4217
Q:

A loan is made for $4800 with an APR of 12% and payments made monthly for 24 months. What is the payment amount? What is the finance charge?

A) 622.80 B) 522.80
C) 322.80 D) 632.80
 
Answer & Explanation Answer: A) 622.80

Explanation:

{\color{Blue} A=R\left [(1+i)^{n-1} \right ]/i ( 1+i )^{n}}

 

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0 4202
Q:

Give an investment of $13200,compound amount of $22680.06 invested for 8 years,what is the interest rate if interest rate is compounded anually?

A) 6% B) 5%
C) 7% D) 8%
 
Answer & Explanation Answer: C) 7%

Explanation:

M = p(1+i)^n

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0 4055
Q:

15 semiannual payments are made into a sinking fund at 7% compounded semiannually so that $4850 will be present. Find the amount of each payment rounded to the nearest cent

A) 251.35 B) 245.45
C) 235.87 D) 251
 
Answer & Explanation Answer: A) 251.35

Explanation:

R=S[i/(1+i)^n-1]

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0 3937
Q:

The difference between compound interest and simple interest on an amount of Rs. 15,000 for 2 years is Rs. 96. What is the rate of interest per annum?

A) 8 B) 10
C) 12 D) 14
 
Answer & Explanation Answer: A) 8

Explanation:

[15000*(1+r/100)2-15000]-(15000*r*2)/100=96

Rate=8%

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0 3863
Q:

Calculate the periodic interest rate corresponding to:9.0% compounded quarterly

A) 3.45 B) 2.25
C) 5.25 D) 6.25
 
Answer & Explanation Answer: B) 2.25

Explanation:

i=j/m

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0 3832
Q:

Assume that money can be invested at 8% compounded quarterly,which is larger,$2500 now or $3800 in 5 years?

A) 1557.29 B) 2557.29
C) 2567 D) 2457
 
Answer & Explanation Answer: B) 2557.29

Explanation:

First find the present value of $3800,then compare present values:

 

M  = p(1+i/4)^4n

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2 3719
Q:

What is the interest rate per annum, if a sum of money invested at compound interest amount to Rs. 2400 in 3 years and in 4 years to Rs. 2,520?

A) 3.5% B) 4%
C) 5% D) 6.5%
 
Answer & Explanation Answer: C) 5%

Explanation:

Let 'R%' be the rate of interest

From the given data,

25202400 = 1 + R10041 + R1003⇒1 + R100 = 6360⇒R = 5

 

Hence, the rate of interest R = 5% per annum.

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