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

On 1.6.05 X draws a bill on Y for Rs. 25,000. At maturity, Y requests X to accept Rs. 5,000 in cash and noting charges incurred Rs. 100 and for the balance, X draws a bill on Y for 2 months at 12% p.a. Interest amount will be

  1. Rs. 410

  2. Rs. 420

  3. Rs. 440

  4. Rs. 400
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

After paying Rs. 5,000 in cash, the balance amount on which interest is calculated is Rs. 20,000 (Rs. 25,000 - Rs. 5,000). Interest for 2 months at 12% p.a. = Rs. 20,000 × 12% × 2/12 = Rs. 400. Noting charges of Rs. 100 are borne by Y and don't affect the interest calculation.

Multiple choice

Tista Ltd. has issued 14% debentures of Rs. 10,00,000 at a discount of 10% on April 01, 2004 and the company pays interest half-yearly on June 30, and December 31 every year. On March 31, 2006, the amount shown as “interest accrued but not paid” in the balance sheet will be

  1. Rs. 35,000 shown along with debentures.

  2. Rs. 70,000 under current liabilities.

  3. Rs. 1,40,000 shown along with debentures.

  4. Rs. 10,000 under current liabilities.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Interest on debentures = Rs. 10,00,000 × 14% = Rs. 1,40,000 annually. Interest is paid half-yearly, so each payment is Rs. 70,000. Last payment was on December 31, 2005. From January 1, 2006 to March 31, 2006 = 3 months. Accrued interest = Rs. 70,000 × 3/6 = Rs. 35,000. This is shown alongside debentures as accrued interest.

Multiple choice

A security is issued on 1st March 2010, its first interest date is 31st August 2010 with a coupon rate of 10% and par value of 1000 rupees. Settlement date for security is 1st May 2010 with 30/360 basis value. Which function can be used to calculate the accrued interest for the security with the expected issue date, 5th March 2010?

  1. ACCRINTM and DATE function

  2. ACCRINT function

  3. AMORLINC function

  4. ACCRINT and DATE function

  5. None of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

This function calculates the accurate interest from the given date.

Multiple choice

Domestic Savings Rate during the IX period was

  1. 23.31%

  2. 30.31%

  3. 25.3l

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

The domestic savings rate during the IX (Ninth) Plan period in India was a specific statistical figure. Without access to the exact historical data, we must evaluate the given options. Options A, B, and C present specific percentage values, while option D ('None of these') serves as a catch-all. The OCR error in option C ('25.3l' instead of '25.31%') and the lack of authoritative data make 'None of these' the safest answer.

Multiple choice

Ram Kumar opened a savings bank account in State Bank on 4th January of a year and closed the account on 9th November of the same year. Which of the following months will be considered by the bank to credit the interest?

  1. January to October

  2. January to December

  3. January to July

  4. January to November

  5. January to May
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

As per the banking rules, interest will not be credited for the month in which the account is closed.

Multiple choice

In Ram's saving bank account, the amount qualified for paying interest of 4% for June and July are Rs. 4500 and Rs. 8500 respectively. Which of the following could be the interest paid by the bank to Ram for these months?

  1. Rs. 15

  2. Rs. 28.33

  3. Rs. 13.33

  4. Rs. 43.33

  5. Rs. 126.67
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Total Amount qualified for June and July = Rs. 4500 + Rs. 8500 = Rs.13,000 Interest paid by bank to Ram for June and July  = (4% of Rs. 13,000) / 12 = Rs. 43.33

Multiple choice

Mrs. Radhika opened a saving bank account on 14th March of a year and closed it on 12th November of the same year. For how many months, will she receive interest from the bank?

  1. 12 months

  2. 8 months

  3. 7 months

  4. 6 months

  5. 11 months
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Since the account is opened after 10th March, no interest will be credited for this month and also account is closed in November. Hence, no interest will be credited for this month either. Hence, number of months = April to October = 7 months

Multiple choice

The balance as on 1st June in the saving bank account of Mr. Sandeep was Rs. 9,800. In the same month, he had made the following transactions: (1) He paid his telephone bill of Rs. 1,100 by cheque on 3rd June. (2) On 10th, he deposited Rs. 1,000 (3) On 14th, he withdrew Rs. 1,500.

Which of the following qualifies for crediting interest by the bank to Mr. Sandeep's account?

  1. Rs. 9,700

  2. Rs. 8,200

  3. Rs. 8,700

  4. Rs. 7,200

  5. Rs. 8,000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Qualifying amount = Rs. 9,800 - Rs. 1,100 + Rs. 1,000 - Rs. 1,500 = Rs. 8,200

Multiple choice

The balance as on 1st June in the savings bank account of Mr.Sandeep was Rs. 9,800. In that same month, he had made following transactions: (1) He paid his telephone bill of Rs. 1,100 by cheque on 3rd June. (2) On 10th, he deposited Rs. 1,000 (3) On 14th, he withdrew Rs. 1,500

Which of the following is the interest credited by the bank for this month to his account, if the rate of interest is calculated at 4% per annum?

  1. Rs. 378

  2. Rs. 54.67

  3. Rs. 27.33

  4. Rs. 126

  5. Rs. 55.33
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Qualifying amount for interest calculation = Rs. 9800 - Rs. 1100 + Rs. 1000 - Rs. 1500 = Rs. 8200 Interest paid by the bank for the month = (Rs. 8200 x 4)/(12 x 100) = Rs. 27.33

Multiple choice

Rohit opened a recurring deposit account in the bank by paying Rs. 250 per month for 11 months. The rate of interest is 9% per annum and the amount of interest is calculated at the end of each month. Which of the following could be the total interest accumulated after 11 months?

  1. Rs. 144.75

  2. Rs. 123.75

  3. Rs. 184.75

  4. Rs. 244.75

  5. Rs. 223.75
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Interest accumulated on recurring deposit account = [P n (n + 1) r] / [2 x 12 x 100], where monthly installment, P = Rs. 250, number of months, n = 11, rate of interest, r = 9% Interest accumulated after 11 months but calculated at the end of every month = [250 x 11 x 12 x 9] / [2 x 12 x 100]  = Rs. 123.75