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 mathematics and statistics compound interest [using formula] compounding interest annually compouding interest compounding interest non-annually

A sum of Rs. $13,500$ is invested at $16\%$ per annum compound interest for $5$ years. Calculate the interest for the second year, correct to the nearest rupee.

  1. Rs. 2,106

  2. Rs. 2,279

  3. Rs. 2,506

  4. Rs. 2,792
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

$Sum=Rs.13500$

$Rate=16%$
Amount at the end of first year$=P\left(1+\frac{R}{100}\right)^T$

$\Rightarrow 13500\left(1+\dfrac{16}{100}\right)$

$\Rightarrow 13500\times \dfrac{116}{100}=Rs.15660$

For the second year

$Sum=Rs.15660$

Then amount after second year$=15660\left(1+\dfrac{16}{100}\right)$

$\Rightarrow 15600\times \dfrac{116}{100}=Rs.18165.6$

$\therefore$ Interest for second year$=18165.6-15660=Rs.2505.6=Rs.2506$

Multiple choice mathematics and statistics compound interest [using formula] compounding interest annually compouding interest compounding interest non-annually

A sum of money placed out at compound interest amounts to Rs. 20,160 in 3 years and to Rs. 24,192 in 4 years. Calculate amount in 2 years.

  1. Rs. 12,500

  2. Rs. 16,800

  3. Rs. 19,600

  4. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Amount in three year $=Rs. 20160$


Amount in four year $=Rs.24192$

Interest in 1 year $=24192-20160=Rs.4032$

Let the rate of interest $=R$%

C.I fir 1 year=S.I for 1 year$=\frac{PRT}{100}$

$\Rightarrow 4032=\dfrac{20160\times R\times 1}{100}$

$\Rightarrow R=\dfrac{4032\times 100}{20160\times 1}=20$%

Amount in 3 years $=$ Rs. $20160$

Let the sum be x
$\therefore 20160=x \left(1+\dfrac{20}{100} \right)$

$\Rightarrow 20160=x\times \dfrac{120}{100}$

$\Rightarrow x=\dfrac{20160\times 100}{120}=Rs.16800$

Hence the amount in $2$ year is Rs. $16800.$


Multiple choice mathematics and statistics compound interest [using formula] compounding interest annually compouding interest compounding interest non-annually

Ramesh invests Rs. 12,800 for three years at the rate of 10% per annum compound interest. Find the total amount due to him at the end of the third year.

  1. Rs. 16,036.80

  2. Rs. 17,036.80

  3. Rs. 18,036.80

  4. Rs. 19,036.80
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Principal $=Rs.12800$

Rate of interest $=10$%
Time $=3$ years

$Amount=P\left(1+\dfrac{R}{100}\right)^T$

$\Rightarrow A=12800\left(1+d\dfrac{10}{100}\right)^3$

$\Rightarrow \ A= 12800\times \dfrac{110}{100}\times \dfrac{110}{100}\times \dfrac{110}{100}=Rs. 17036.80$

Multiple choice mathematics and statistics compound interest [using formula] compounding interest annually compouding interest compounding interest non-annually

The compound interest, calculated by yearly, on a certain sum of money for the second year is Rs. 864 and the third year is Rs. 933.12. calculate the rate of interest and the compouned interest on the same sum and at the same rate, for the fourth year.

  1. 0
  2. $Rs. 1007.77$
  3. $Rs. 1000$
  4. $Rs. 1100$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Rate of interest=$\frac{Difference  in  interest  of  two  consecutive periods\times 100}{C.I  of  preceding year\times Time}\times 100$

$\Rightarrow \frac{933.12-864}{864\times 1}\times 100$
$\Rightarrow \frac{69.12}{864}\times 100=8$%

C.I for the forth year=$933.12+8\% of 933.12$
$\Rightarrow 933.12+\frac{8}{100}\times 933.12$
$\Rightarrow 933.12+74.65=Rs.1007.77$


Multiple choice mathematics and statistics compound interest [using formula] compounding interest annually compouding interest compounding interest non-annually

Find the amount of Rs. $  8000$ for $3$ years, compounded annually at $10 \%$ per annum. Also, find the compound interest.

  1. $2648$
  2. $2640$
  3. $2348$
  4. $2216$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Here, $P=$ Rs. $8000,R=10\%$ per annum and $n=3$ years

Using the formula, $A=P\left (1+\dfrac {R}{100}\right)^n$
Amount after $3$ years $=8000\times \left (1+\dfrac {10}{100}\right)^3$
$=8000\times \dfrac {11}{10}\times \dfrac {11}{10}\times \dfrac {11}{10}$
$=10648$
Thus, amount after $3$ years $=$ Rs. $1648$.
And compound interest $=$ Rs. $(10648-8000)=2648$.

Multiple choice mathematics and statistics compound interest [using formula] compounding interest annually compouding interest compounding interest non-annually

If the present value of my investment is Rs. $2,000$ and the rate of interest is $5\%$ compounded annually, what will the value be after $5$ years?

  1. $2341.12$
  2. $1348.90$
  3. $2552.56$
  4. $3129.10$
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Given, Principal $P=2,000, r=5\%, n=5$ years

We know the formula of compound interest,
$A = P\left (1+\dfrac {r}{100}\right)^n$
$ = 2000\left (1+\dfrac{5}{100}\right)^5$
$ = 2000\left (1+\dfrac{5}{100}\right)^5$
$ = 2000 \times 1.05^5$
$ =$ Rs. $2552.56$

Multiple choice mathematics and statistics compound interest [using formula] compounding interest annually compouding interest compounding interest non-annually

The principal that amounts to Rs. $4913$ in $4\dfrac{1}{2}$ years at $6\%$ per annum compound interest, compounded annually, is

  1. $3179.81$
  2. $3579.81$
  3. $3779.81$
  4. $3979.81$
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

We know the formula,
$A = P\left (1+\dfrac{r}{n}\right)^{n.t}$
Given, $A =$ Rs. $4913$, $ r = 6\%$, $n = 4$ and $t =$ $4\dfrac{1}{2}$ years
Therefore, $4913 = P\left (1+\dfrac{0.06}{1}\right)^{1\times 4.5}$
$\Rightarrow 4913 = P\times 1.06^{4.5}$
$\Rightarrow 4913 = P\times 1.2998$
$\Rightarrow P = \dfrac{4913}{1.2998}$
$\Rightarrow P =$ Rs. $3779.81$

Multiple choice mathematics and statistics compound interest [using formula] compounding interest annually compouding interest compounding interest non-annually

On what sum will the compound interest for $4\dfrac{1}{2}$ years at $10\%$ amount to Rs. $4620$?

  1. $2008.67$
  2. $3008.67$
  3. $4008.67$
  4. $5008.67$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

We know the formula,
$A = P\left (1+\dfrac{r}{n}\right)^{n.t}$
Given, $A =$ Rs. $4620$, $r = 10\%$, $n = 1$ and $t =$ $4\dfrac{1}{2}$ years
Therefore, $4620 = P\left (1+\dfrac{0.1}{1}\right)^{1\times 4.5}$
$\Rightarrow 4620 = P\times 1.1^{4.5}$
$\Rightarrow 4620 = P\times 1.535561$
$\Rightarrow P = \dfrac{4620}{1.535561}$
$\Rightarrow P =$ Rs. $3008.67$

Multiple choice mathematics and statistics compound interest [using formula] compounding interest annually compouding interest compounding interest non-annually

What will a deposit of Rs. $3,500$ at $10\%$ compounded monthly be worth if left in the bank for $5\dfrac{1}{2}$ years?

  1. $1552.45$
  2. $2552.45$
  3. $3552.45$
  4. $4552.45$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

We know the formula,
$A = P(1+\frac{r}{n})^{n.t}$
Given, $P =$ Rs. $3500$, $r = 10\%$, $n = 12$ and $t =$ $5\dfrac{1}{2}$ years
Therefore, we have $A = 3500\left (1+\dfrac{0.1}{12}\right)^{12\times 5.5}$
$\Rightarrow A = 3500\times 1.008^{66}$
$\Rightarrow A = 3500\times 1.72927$
$\Rightarrow A = 6052.45$
To find interest we use formula $A = P + I$, since $A = 6052.45$ and $P = 3500$, we have:
$A = P + I$
$\Rightarrow 6052.45 = 3500 + I$
$\Rightarrow I = 6052.45 - 3500 = 2552.45$
Interest, $I =$ Rs. $2552.45$

Multiple choice mathematics and statistics compound interest [using formula] compounding interest annually compouding interest compounding interest non-annually

The compound interest on Rs. $4000$ at $3\%$ per annum for $3\dfrac{1}{2}$ years, compounded annually, is

  1. $135.99$
  2. $235.99$
  3. $335.99$
  4. $435.99$
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

We know the formula,
$A = P\left (1+\dfrac{r}{n}\right)^{n.t}$
Given:
$P =$ Rs. $4000, r = 3\%, n = 1$ and $t = 3.5$ years
$\Rightarrow A = 4000\left (1+\dfrac{0.03}{1}\right)^{1\times 3.5}$
$\Rightarrow A = 4000\times 1.03^{3.5}$
$\Rightarrow A = 4000\times 1.108997$
$\Rightarrow A =$ Rs. $4435.99$
To find interest, we use formula 

$A = P + I$
Since $A = 4435.99$ and $P = 4000$, 
we have $A = P + I$
$\Rightarrow 4435.99 = 4000 + I$
$\Rightarrow I = 4435.99 - 4000 = 435.99$
Interest, $I =$ Rs. $435.99$

Multiple choice mathematics and statistics compound interest [using formula] compounding interest annually compouding interest compounding interest non-annually

Lauren puts Rs. $600.00$ into an account to use for school expenses. The account earns $3\%$ interest, compounded annually. How much will be in the account after $6\dfrac{1}{2}$ years?

  1. $527.1$
  2. $627.1$
  3. $727.1$
  4. $827.1$
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

We know the formula,
$A = P\left (1+\dfrac{r}{n}\right)^{n.t}$
Where,
$A =$ total amount
$P =$ principal or amount of money deposited,
$r =$ annual interest rate
$n =$ number of times compounded per year
$t =$ time in years
Given:
$P =$ Rs. $600, r = 3\%, n = 1 $ and $t =$ $6\dfrac{1}{2}$ years
$A = 600\left (1+\dfrac{0.03}{1}\right)^{1\times 6.5}$
$A = 600\times 1.03^{6.5}$
$A = 600\times 1.211831$
$A =$ Rs. $727.1$

Multiple choice mathematics and statistics compound interest [using formula] compounding interest annually compouding interest compounding interest non-annually

Babu opened a savings account and deposited Rs. $1200.00$ as principal. The account earns $10\%$ interest, compounded annually. What is the balance after $2\dfrac{1}{2}$ years?

  1. Rs. $1522.87$
  2. Rs. $1400.67$
  3. Rs. $1456.37$

  4. None of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

We know the formula,
$A = P\left (1+\dfrac{r}{n}\right)^{n.t}$
Where,
$A =$ total amount
$P =$ principal or amount of money deposited,
$r =$ annual interest rate
$n =$ number of times compounded per year
$t =$ time in years
Given: $P =$ Rs. $1200, r = 10\%, n = 1$ and $t =$ $2\dfrac{1}{2}$ years
$A = 1200\left (1+\dfrac{0.1}{1}\right)^{1\times 2.5}$
$A = 1200\times 1.1^{2.5}$
$A = 1200\times 1.269059$
$A =$ Rs. $1522.87$

Multiple choice mathematics and statistics compound interest [using formula] compounding interest annually compouding interest compounding interest non-annually

Edwin opened a savings account and deposited Rs. $3000$ as principal. The account earns $5\%$ interest, compounded annually. What is the balance after $10$ years?

  1. $4886$
  2. $4566$
  3. $4658$
  4. $5460$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Given: $P = 3000, r = 5\%, n = 10$ years
We know $A = P\left [\left (1+\dfrac{r}{100}\right)^n\right]$
Putting all the given values in the formula, we get

$A = 3000\left [\left (1+\dfrac{5}{100}\right)^10\right]$
$A =$ Rs. $4886$

Multiple choice mathematics and statistics compound interest [using formula] compounding interest annually compouding interest compounding interest non-annually

Elsa puts Rs. $1000$ into an account to use for school expenses. The account earns $10\%$ interest, compounded annually. How much will be in the account after $3$ years?

  1. $1210$
  2. $2210$
  3. $3210$
  4. $4210$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Given: $P = 1000, r = 10\%, n = 2$ years
We know the formula $A = P\left [\left (1+\dfrac{r}{100}\right)^n\right]$
Putting all the given values in the formula, we get

$A = 1000\left [\left (1+\dfrac{10}{100}\right)^2\right]$
$A =$ Rs. $1210$

Multiple choice mathematics and statistics compound interest [using formula] compounding interest annually compouding interest compounding interest non-annually

Calculate the amount and the compound interest on a sum of Rs. $20000$ at the end of $3$ years at the rate of $10\%$ p.a. compounded annually.

  1. $6620$
  2. $5620$
  3. $3410$
  4. $2386$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Given, $P = 20000, r = 10\%, n = 3$ years
$A = P\left [\left (1+\dfrac{r}{100}\right)^n\right]$
$A = 20000\left [\left (1+\dfrac{10}{100}\right)^3\right]$
$A =$ Rs. $26620$
Compound interest $=$ Amount $-$ Principal
CI $= 26620 - 20000$
CI $=$ Rs. $6620$