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

A Drawn Rs.1000 per month on the last day of every month. If the rate of interest is 5% p.a. then the total interest or drawings will be:

  1. Rs. 325

  2. Rs. 275

  3. Rs. 300

  4. Rs. 350
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
Interest on drawing = Total drawings x rate of interest x average period/12
                                 = 1,000 x 12 x 5/100 x 5.5/12 (WN 1)
                                 = 12,000 x 5% x 5.5/12
                                 = RS-275.

Working note:-
Average period = Beginning period of use + end period of use
                             ------------------------------------------------------------------
                                                                2
                           = 11 + 0
                             --------
                                 2
                          = 5.5 
Multiple choice book keeping and accountancy adjustments drawing account of partners interest on drawings interest on partner's drawings and capital

Kamal and Vimal are partners in a firm. They share profits equally. Their monthly drawings are Rs 2,000 each. Interest on drawings is to be charged at 10% p.a. Calculate interest on Kamal and Vimal's drawings for the year 2016, assuming that amount is withdrawn in the beginning of every month.

  1. Rs 1,300 and Rs 1,100

  2. Rs 1,200 and Rs 1,200

  3. Rs 1,100 and Rs 1,100

  4. Rs 1,300 and Rs 1,300
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
Interest on drawings = Amount withdrawn x rate x average period / 12
                                   = 2,000 x 12 x 10/100 x 6.5/12
                                   = 24,000 x 10/100 x 6.5/12
                                   = RS-1,300 for both Kamal and Vimal. 

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

Calculate the interest on drawings of Ram @ 10% p.a. for the year ended 31st March 2017, If he withdrew Rs 3,000 at the end of every month. Assuming that drawings were made evenly throughout the year.

  1. Rs 1,850

  2. Rs 1,650

  3. Rs 1.250

  4. Rs 1,350
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Assuming that the drawings were made evenly throughout the year, the interest on drawings has been calculated for an average period of 6 months.
Interest on Drawings = Total Drawings x Rate/100 x 5.5/12

Interest on Drawings = Rs. 3000 $\times$ 12 $\times$ 10/100 $\times$ 5.5/12
Interest on Drawings =  Rs. 1650

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

Harish is a partner in a firm. He withdrew the following amounts during the year 2017:
May 1 -                      4,000
August 1 -                10,000
September 30 -         4,000
January 31 -            12,000
March 31 -                 4,000

Interest on drawings is to be charged @ 7.5% p.a. Calculate the amount of interest to be charged on Harish's drawing for the year ending March 31, 2018.  

  1. Rs. 1,100

  2. Rs. 1,125

  3. Rs. 1,075

  4. Rs. 1,200
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation
Date             No. of months till     Workings                                                   Total
May 1                    11 months       4,000 x 11/12 x 7.5/12                               RS-275
August 1                8 months       10,000 x 8/12 x 7.5/12                             RS-500
September 30      6 months       4,000 x 6/12 x 7.5/12                              RS-150
January 31            2 months       12,000 x 2/12 x 7.5/12                             RS-150
March 31                    0                                 0                                                   0
Total interest                                                                                            = RS-1,075
Multiple choice book keeping and accountancy adjustments drawing account of partners interest on drawings interest on partner's drawings and capital

Ram and Mohan, are partners. They Draw for private use Rs. 6,000 and Rs. 4000 respectively. Interest is chargeable @ 6% per annum on drawings. What is the interest?

  1. Ram Rs. 180 and Mohan Rs. 120

  2. Ram Rs. 360 and Mohan Rs. 240

  3. Ram Rs. 30 and Mohan Rs. 20

  4. None
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
Interest on drawings = Amount x rate of interest x average period
 RAM:-
= 6,000 x 6/100 x 6/12
= RS-180
 MOHAN:-
= 4,000 x 6/100 x 6/12
= RS-120.

Note:-
Because nothing is mentioned hence, average period is taken as 6/12.  
Multiple choice book keeping and accountancy adjustments drawing account of partners interest on drawings interest on partner's drawings and capital

Kiran, a partner in a firm, withdrew money from his capital account during the year ended 31, March 2017. If the amounts withdrawn were: Rs. $12,000$ on June 01, 2015, Rs. $8,000$; on August 31, 2015, Rs. $3,000$; on September 30, 2015, Rs. $7,000$, on November 30, 2015, and Rs. $6,000$ on January 31, 2016. Calculate interest in drawings, if rate of interest is $9$ per cent per annum.

  1. Rs. $1,800$
  2. Rs. $2,400$
  3. Rs. $1,755$
  4. Rs. $1,585$
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation
 S.No.  Amount withdrawn Date of drawing   No. of months till 31.12.2016 Product 
 1.  12,000  01.06.2015  10  1,20,000
 2.  8,000  31.08.2015  7  56,000
 3. 3,000   30.09.2015  6  18,000
 4.  7,000  30.11.02015  4  28,000
 5.  6,000  31.01.2016  2  12,000
     Total Product    2,34,000
     Interest on Drawings   Total Product x Rate of Interest x Common Factor
         2,34,000x 9% x 1/12 
         1,755
        (Rate of Interest = 9%)
        (Common factor = 1/12)
Multiple choice introduction to ratio and percentages comparing quantities maths

The difference between simple interest and compound interest on a certain sum of money for 3 years at 5% per annum is Rs. 122. Find the sum

  1. Rs. 12,200

  2. Rs. 15,000

  3. Rs. 16,500

  4. Rs. 16,000
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Suppose $sum=P$
Given $CI-SI=Rs. 122$
$P\left (1+\frac {5}{100}\right )^3-P-\left (\frac {P\times 5\times 3}{100}\right )=122$
$P\left (\frac {105^3}{100^3}-1-\frac {15}{100}\right )=122$
$P\left (\frac {7,625}{100^3}\right )=122$
$P=\frac {122\times 100^3}{7,625}=Rs. 16,000$

Multiple choice introduction to ratio and percentages comparing quantities maths

A person invested Rs 1,600 for 3 years and Rs 1,100 for 4 years at the same rate of simple interest. The total interest from these investments was Rs 506. Find the rate percent per annum

  1. 5%
  2. $5\frac {1}{2}$%

  3. 6%
  4. $6\frac {1}{2}$%
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

$P _1=1,600, t _1=3$
$P _2=1,1000, t _2=4$
$SI _1+SI _2=506$
or $\frac {1,600\times 3\times r}{100}+\frac {1,100\times 4\times r}{100}=506$
or $r(4,800+4,400)=506\times 100$
or $r=\frac {506\times 100}{92,000}=5.5$%

Multiple choice elements of accounts ledger and posting distinction between subsidiary books and ledger explain the meaning of ledger posting methods of posting entries

Suppose One Dealer has a credit of ' 5/-Lakhs in his Electronic ITC Ledger. That dealer has an interest arrears dues of '6/-Lakhs and Penalty Dues of ' 2/-Lakhs. If so, how much, he has to deposit to settle the above interest and Penalty Dues?

  1. 3/-Lakhs

  2. 6/-Lakhs

  3. 2/-Lakhs

  4. 8/-Lakhs
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Electronic ITC ledger credits can generally be used to pay tax liabilities, but interest and penalties must typically be paid in cash. Therefore, the dealer must deposit the full amount of the arrears and penalties.

Multiple choice mathematics and statistics interest applying compound interest compound interest formula with different successive rate of interest compound interest ( for different time period)

The compound interest on Rs. 50,000 at 4% per annum for two years compounded anually is :

  1. $4000$
  2. $4080$
  3. $4280$
  4. $4050$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

C.I. = Amount - Principle

=> $P((1+\dfrac{r}{100})^{T} _{} - 1)$
CI = $50,000(1+\dfrac{4}{100})^{2} _{} - 1)$
C.I.= $4080.$

Multiple choice mathematics and statistics interest applying compound interest compound interest formula with different successive rate of interest compound interest ( for different time period)

At what rate percent per annum will a sum of Rs. $2000$ amount to Rs. $2205$ in $2$ years at compound interest?

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

$\Rightarrow$  $P=$Rs.$2000,\,A=$Rs.$2205$ and $T=2\,$years.

$\Rightarrow$  $A=P(1+\dfrac{R}{100})^T$

$\Rightarrow$  $2205=2000\times (1+\dfrac{R}{100})^2$

$\Rightarrow$  $\dfrac{441}{400}=(1+\dfrac{R}{100})^2$

$\Rightarrow$  $\dfrac{21}{20}=(1+\dfrac{R}{100})$

$\Rightarrow$  $R=\dfrac{1}{20}\times 100=5\%$

Multiple choice mathematics and statistics interest applying compound interest compound interest formula with different successive rate of interest compound interest ( for different time period)

The cost of a car purchased 2 years ago depreciates at the rate of 20% per annum. If its present value is Rs 3, 15,600, find the value of the car after 2 years

  1. Rs 2,01,994

  2. Rs 50,496

  3. Rs 2,01,984

  4. Rs 10,09,920
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

$Depreciation = A=P\left (1-\frac {r}{100}\right )^n=3,15,600\left (1-\frac {20}{100}\right )^2$
$=3,15,600\left (\frac {4}{5}\right )^2=3,15,600\times \frac {16}{25}=Rs 2,01,984$

Multiple choice mathematics and statistics interest applying compound interest compound interest formula with different successive rate of interest compound interest ( for different time period)

What sum will amount to Rs. $32,967$ in $2$ years C.I., if the rates are $10$ per cent and $11$ per cent for the successive years?

  1. Rs. $25,000$
  2. Rs. $26,000$
  3. Rs. $27,000$
  4. Rs. $28,000$
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

$\Rightarrow$  $P=$Rs.$32,967,\,R _1=10\%,\,R _2=11\%$


$\Rightarrow$  $A=P\times (1+\dfrac{R _1}{100})\times (1+\dfrac{R _2}{100})$

$\Rightarrow$  $32967=P\times (1+\dfrac{10}{100})\times (1+\dfrac{11}{100})$

$\Rightarrow$  $32967=P\times \dfrac{11}{10}\times \dfrac{111}{100}$

$\Rightarrow$  $P=\dfrac{32967\times 1000}{1221}=27\times 1000=$Rs. $27,000$

Multiple choice mathematics and statistics interest applying compound interest compound interest formula with different successive rate of interest compound interest ( for different time period)

What sum will amount to Rs. $65,934$ in $2$ years C.I., if the rates are $10$ per cent and $11$ per cent for the successive years?

  1. $53,000$
  2. $54,000$
  3. $55,000$
  4. $60,000$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
$A _1=P(1+\cfrac{10}{100})^1=P\times 1.1$
$A _2=A _1(1+\cfrac{11}{100})^1=P\times 1.221$
$\implies 65934=1.221P\\ \implies p=54,000$
Hence sum$=Rs.54,000$

Multiple choice mathematics and statistics interest applying compound interest compound interest formula with different successive rate of interest compound interest ( for different time period)

Calculate the amount and the compound interest on :

Rs. $4,600$ in $2$ years when the rates of interest of successive years are $10$% and $12$% respectively.

  1. Rs. 5,667.20 and Rs. 1,067.20

  2. Rs. 5,600.20 and Rs. 167.20

  3. Rs. 5,680.20 and Rs. 167.20

  4. Rs. 5,667.20 and Rs. 1,000.20

Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

C.I of 4600 for 2 year at rate of interest are 10% and 12%
$Amount=4600\times \left(1+\dfrac{10}{100}  \right)\left(1+\dfrac{12}{100}  \right)$

$\Rightarrow 4600\times \dfrac{110}{100}\times \dfrac{112}{100}$

$\Rightarrow 5667.20  Rs.$

$C.I.=5667.20-4600=1067.20  Rs.$