Quantitative Aptitude · Commerce Accountancy

Interest and Annuities

621 Questions

Interest and annuities represent a critical quantitative aptitude section focusing on the mathematical calculation of simple interest, compound interest, and future values of investments. Questions challenge candidates to determine maturity values, compute recurring deposit returns, and calculate prevailing interest rates. Mastery of this topic is essential for scoring high in banking and SSC examinations.

Simple and compound interestFuture value of annuitiesRecurring deposit calculationsInterest rate determinationPresent value formulas

Interest and Annuities Questions

Multiple choice elements of book keeping and accountancy commission,brokerage and discount advantages of bill of exchange definition, characteristics and parties of bills of exchange simple transactions related to bills of exchange

A draws a bill on B for Rs. 6,000 for mutual accommodation in the ratio 2:1, A got it discounted Rs. 5,800 and remitted 1/3rd of the proceeds to B. At the time of maturity, how much amount A should remit to B so that B can pay off the bill?

  1. Rs. 4,000

  2. Rs. 3,867

  3. Rs. 3,000

  4. Rs. 3,010
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A received 5,800 (net). B's share is 1/3 of the proceeds (5,800 / 3 = 1,933.33). However, B is responsible for paying his share of the bill amount (1/3 of 6,000 = 2,000) at maturity. A must remit the difference to B to cover B's portion of the liability. 6,000 * (2/3) = 4,000.

Multiple choice elements of book keeping and accountancy commission,brokerage and discount advantages of bill of exchange definition, characteristics and parties of bills of exchange simple transactions related to bills of exchange

A drew a bill on B for Rs. $50,000$ for $3$ months. Proceeds are to be shared equally. A got the bill discounted at $12\%$ p.a. and remits required proceeds to B. The amount of such remittance will be.

  1. $24,250$
  2. $25,000$
  3. $16,167$
  4. $32,333$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Discount = 50,000 * 0.12 * (3/12) = 1,500. Net proceeds = 50,000 - 1,500 = 48,500. Since proceeds are shared equally, B receives 48,500 / 2 = 24,250.

Multiple choice business maths commission,brokerage and discount advantages of bill of exchange definition, characteristics and parties of bills of exchange simple transactions related to bills of exchange

A money lender finds that due to reducing the interest rate decrease from $8\%$ to $7\dfrac{3}{4}\%$, his yearly income diminishes by Rs. 61.50. His capital is 

  1. Rs. 22400

  2. Rs. 23800

  3. Rs. 24600

  4. Rs. 26000
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation
Difference in rate$=\left(8-7\dfrac{3}{4}\right)\%=\dfrac{1}{4}\%$
Let the capital be rate Rs.$x$
$\therefore  \dfrac{1}{4}\%$ of $x=61.50$
$\therefore x = 61.50\times 100\times 4$
     Rs$=24600$
Multiple choice installments banking business and commercial activities economics maths

What annual instalment will discharge a debt of Rs. $2710$ due in $4$ years at $7\%$ simple interest?

  1. Rs. $1000$
  2. Rs. $613$
  3. Rs. $225$
  4. Rs. $150$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Let the annual installment be $x$

Now, $ x$ accumulates an interest of $7.1$ every year
$\implies$
$x$ deposited in first year becomes $1.21x$ in next $3$ years
$x$ deposited in second year becomes $1.11x$ in next $2$ years
$x$ deposited in first year becomes $1.07x$ in next $4$ years
$\implies1.21x+1.41x+1.07x+x=2710\ \implies 4.92x=2710\ \implies x=Rs.613$

Multiple choice installments banking business and commercial activities economics maths

A man buys an iPhone $6$ for Rs. $53{,}000$. He realizes that he cannot pay such a large amount of money right now, so he decides to pay Rs. $4{,}505$ monthly for $12$ months. This amount of Rs. $4{,}505$ is called as:

  1. Simple Interest

  2. Selling Price

  3. Principal Amount

  4. Instalment
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

$\Rightarrow$  A man buys an iPhone $6$ for $Rs.53,000.$ He realize the he cannot pay such a large amount of money right now, so he decides to pay $Rs.4,505$ monthly for $12$ months. This amount of $Rs.4,505$ is called as : $Installment.$

$\Rightarrow$  The monthly or period payment in installment purchase is termed as installment.
$\Rightarrow$   In the case of installment purchase, the purchase happens as soon as the agreement between the buyer and financing Difference between Hire Purchase vs. Installment Purchase company is entered into.
$\Rightarrow$  In installment purchase, purchase and ownership take place before the complete payment.

Multiple choice installments banking business and commercial activities economics maths

Ramu buys a watch whose cost is Rs. $9{,}000$. He decides to pay Rs. $825$ monthly for a period of $12$ months. Calculate the rate of interest charged.

  1. $12\%$
  2. $5\%$
  3. $10\%$
  4. $15\%$
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Here, $P=$ Rs. $9,000,\,T=12$ months $=1$ year and $E.M.I.=$ Rs. $825$.

$\Rightarrow$  $I=\dfrac{P\times R\times T}{100}=\dfrac{9000\times R\times 1}{100}=90R.$
$\Rightarrow$  $E.M.I.=\dfrac{P+I}{\text{Months}}$
$\Rightarrow$  $825=\dfrac{9000+90R}{12}$
$\Rightarrow$   $825\times 12=9000+90R$
$\Rightarrow$   $9900=9000+90R$
$\Rightarrow$  $90R=900$
Thus $R=\dfrac{900}{90}=10\%$

Multiple choice book keeping and accountancy adjustments drawing account of partners interest on drawings interest on partner's drawings and capital

John, a partner in Modern Tours and Travels withdrew money during the year ending March 31, 2016 from his capital account, for his personal use. Calculate interest on drawings, if rate of interest is 9 per cent per annum.  If an amount of Rs. $3,000$ per month was withdrawn by him at the end of each month.

  1. Rs. $1,580$
  2. Rs. $2,355$
  3. Rs. $1,955$
  4. Rs. $1,485$
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Using the average method:

Interest on Drawings = (3,000 x 12) x 9/100 x [(longest outstanding period + shortest outstanding period)/2]/12
= (3,000 x 12) x 9/100 x [(11 + 0)/2]/12
= (3,000 x 12) x 9/100 x (5.5/12)
= 1,485

Multiple choice book keeping and accountancy adjustments drawing account of partners interest on drawings interest on partner's drawings and capital

John, a partner in Modern Tours and Travels withdrew money during the year ending March 31, 2016 from his capital account, for his personal use. Calculate interest in drawings if rate of interest is $9$ per cent per annum and If he withdrew Rs. $3,000$ per month at the beginning of the month.

  1. Rs. $1,485$
  2. Rs. $2,845$
  3. Rs. $1,755$
  4. Rs. $1,580$
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Using the average method:

Interest on drawings = (3,000 x 12) x 9/100 x [(longest outstanding period+shortest outstanding period)/2]/12
=(3,000 x 12) x 9/100 x [(12+1)/2]/12
=36,000 x 9/100 x 6.5/12
=1,755

Multiple choice book keeping and accountancy adjustments drawing account of partners interest on drawings interest on partner's drawings and capital

N & Z are two partners. During the year N withdraws Rs. $37,000$ on $1-5-2012$ & Z withdraws Rs. $45,000$ on $15-8-2012$. Accounts are closed on $31-12-2012$. Rate of interest on drawings is $10\%$ p.a. Interest on drawing for two partner respectively will be.

  1. $2,775$ & $2,063$
  2. $2,063$ & $2,775$
  3. $2,467$ & $1,688$
  4. $1,688$ & $2,467$
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Calculation of interest in drawings:
$N=37,000\times 10\%\times \dfrac{8}{12}=2,467$
$S=45,000\times 10\%\times \dfrac{4.5}{12}=1,688$.

Multiple choice book keeping and accountancy adjustments drawing account of partners interest on drawings interest on partner's drawings and capital

If a fixed amount is withdrawn on the last day of every month of a calendar year, the interest on the total amount of drawings will be calculated for _________. 

  1. 4.5 months

  2. 5.5 months

  3. 6 months

  4. 6.5 months
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
If a fixed amount is withdrawn on last day of every month of the calendar year, the interest on the total amount of drawings will be calculated for 5.5 months. Average period will be calculated as:-
= Months left after first drawing + months left after last drawing 
 ------------------------------------------------------------------------------------------
                                                        2
= 11 + 0
-------------
        2
= 5.5 months.
Multiple choice book keeping and accountancy adjustments drawing account of partners interest on drawings interest on partner's drawings and capital

If a fixed amount is withdrawn on the middle day of every month of a calendar year, the interest on the total amount of drawings will be calculated for ________. 

  1. 4.5 months

  2. 5.5 months

  3. 6 months

  4. 6.5 months
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation
If a fixed amount is withdrawn on the middle day of every month of the calendar year, the interest on the total amount of drawings will be calculated for 6 months. Average period will be calculated as:-
= Months left after first drawing + months left after last drawing 
 ------------------------------------------------------------------------------------------
                                                       2
= 11.5 + 0.5
------------------
         2
= 6months
Multiple choice book keeping and accountancy adjustments drawing account of partners interest on drawings interest on partner's drawings and capital

If a fixed amount is withdrawn on the first day of every quarter of a calendar year, the interest on total amount of drawings will be calculated for _______. 

  1. 4.5 months

  2. 5.5 months

  3. 6 months

  4. 7.5 months
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
If a fixed amount is withdrawn on first day of every quarter of the calendar year, the interest on the total amount of drawings will be calculated for 6.5 months. Average period will be calculated as:-
= Months left after first drawing + months left after last drawing 
 ------------------------------------------------------------------------------------------
                                                        2
= 12 + 3 
------------
       2
= 7.5 months

Explanation:- 
Suppose if the first drawing is made on 1st January then 12 months will be left and in the last quarter October to December last drawing will be made on 1st October and 3 months will be left. 
Multiple choice book keeping and accountancy adjustments drawing account of partners interest on drawings interest on partner's drawings and capital

What time would be taken into consideration if equal monthly amount is drawn as drawing at the beginning of each month? 

  1. 7 months

  2. 6 months

  3. 5 months

  4. 6.5 months
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
If a fixed amount is withdrawn in the beginning of every month of the calendar year, the interest on the total amount of drawings will be calculated for 6.5 months.
Average period will be calculated as:-
= Months left after first drawing + months left after last drawing 
 ------------------------------------------------------------------------------------------
                                                        2
= 12 + 1 
-----------
      2
= 6.5 months
Multiple choice book keeping and accountancy adjustments drawing account of partners interest on drawings interest on partner's drawings and capital

If a fixed amount is withdrawn on the middle day of every quarter of a calendar year, the interest on total amount of drawings will be calculated for ________. 

  1. 4.5 months

  2. 5.5 months

  3. 6 months

  4. 6.5 months
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation
If a fixed amount is withdrawn on middle day of every quarter of the calendar year, the interest on the total amount of drawings will be calculated for 6 months. Average period will be calculated as:-
= Months left after first drawing + months left after last drawing 
 ------------------------------------------------------------------------------------------
                                                        2
= 10.5 + 1.5
------------
       2
= 6 months

Explanation:- 
Suppose if the first drawing is made on ( 1st quarter January to March) 15th February then 10.5 months will be left and in the last quarter October to December last drawing will be made on 15th November and 1.5 months will be left. 
Multiple choice book keeping and accountancy adjustments drawing account of partners interest on drawings interest on partner's drawings and capital

If a fixed amount is withdrawn on the last day of every quarter of a calendar year, the interest on the total amount of drawings will be calculated for __________.

  1. 4.5 months

  2. 5.5 months

  3. 6 months

  4. 6.5 months
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
If a fixed amount is withdrawn on last day of every quarter of the calendar year, the interest on the total amount of drawings will be calculated for 6.5 months. Average period will be calculated as:-
= Months left after first drawing + months left after last drawing 
 ------------------------------------------------------------------------------------------
                                                        2
= 9 + 0 
------------
       2
= 4.5 months

Explanation:- 
Suppose if the first drawing is made on 31st march( 1st quarter Jan-march) then 9 months will be left and in the last quarter October to December last drawing will be made on 31st December and 0 months will be left.