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

Rohit opened a recurring deposit account in the bank by depositing Rs. 250 per month for 11 months. The rate of interest is 9% per annum and the interest amount is calculated at the end of each month.

Which of the following could be the maturity value of the recurring deposit?

  1. Rs. 1,873.75

  2. Rs. 3,873.75

  3. Rs. 2,873.75

  4. Rs. 873.75

  5. Rs. 7,873.75
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Interest accumulated on recurring deposit account = [P n (n + 1) r] / 2400, where, P = Rs. 250 , n = 11, r = 9%

Interest accumulated = [250 x 11 x 12 x 9] / 2400 = Rs. 123.75 Maturity value = Total amount deposited + Interest accumulated = (250 x 11) + 123.75 = Rs. 2,873.75

Multiple choice

Which of the following is rate of interest given to Radha, if she receives the maturity amount of Rs. 6,455 from her recurring deposit account with the monthly deposit of Rs. 500 for one year?

  1. 24%

  2. 4%

  3. 14%

  4. 11%

  5. 2.4%
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Interest accumulated = [P n (n + 1) r] / 2400, where P = Rs. 500, n = 12 months, r = ? Interest accumulated = 6,455 - (500 x 12)  = 6, 455 - 6,000 = 455 Now, by using above formula we get 455 = [500 x 12 x 13 x r] / 2400 r = 14%

Multiple choice

Suma gets Rs. 7,725.00 at the end of two years from recurring deposit account at the rate of 7% per annum. Which of the following is her monthly instalment?

  1. Rs. 300

  2. Rs. 3,000

  3. Rs. 400

  4. Rs. 600

  5. Rs. 500
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Interest accumulated = [P x n (n + 1) r] / 2400, where P = ?, n = 12 x 2 = 24 months and r = 7%

Interest accumulated = [P x 24 x 25 x 7] / 2400 = 1.75P Maturity amount = 24P + 1.75P 7,725 = 25.75P  Therefore,   P = Rs. 300

Multiple choice

Deepak opened a recurring deposit account in a bank and deposited Rs. 500 per month for 3 years. If he will receive an amount of Rs. 24,000 at the time of maturity, what is the rate of interest?

  1. 11.62%

  2. 1.62%

  3. 10.62%

  4. 21.62%

  5. 2.62%
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Interest accumulated on recurring deposit = [P n (n+1) r] / 2400, where, P = Rs. 500, n = (12 x 3) = 36 months, r = ? Interest accumulated = 24,000 - (500 x 36)  = 24,000 - 18,000 = Rs. 6,000 Therefore, by using above formula,  6000  = [500 x 36 x 37 x r] / 2400 6,000 = 277.5r r = 21.62%

Multiple choice

Calculate interest on drawings of partner Madhav, if he draws Rs. 4500 at the begining of each quarter and the rate of interest on drawings is equal to the rate of interest on loan. Rate of interest on loan is the same, which should be allowed in the absence of partnership deed.

  1. Rs. 675

  2. Rs. 1350

  3. Rs. 540

  4. Rs. 168.75
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Amount of drawings = (P) = 4500 * 4 = Rs. 18000, R = 6% as interest on loan is also allowed 6%, Time = 7.5 months, if drawings are made at the begining of each quarter. Thus, correct answer is 18000 * 6% * 7.5/12 = Rs. 675.

Multiple choice

Calculate the payback period, if a project requires Rs. 1,00,000 as initial investment and it generates a cash inflow of Rs. 25,000 for ten years.

  1. 4 years

  2. 6 years

  3. 5 years

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

It is 4 years. Pay back period =  Initial Investment / Annual Cash Inflow Initial investment required in project is of Rs. 1,00,000. Annual cash inflow is of Rs. 25,000 Hence, Pay back period = Rs. 1,00,000 / 25,000 = 4 years

Multiple choice

What is the current rate of Cash Reserve Ratio (CRR)?

  1. 3.5%

  2. 4.0%

  3. 4.5%

  4. 5.0%
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The Cash Reserve Ratio (CRR) is the percentage of deposits banks must maintain with the RBI. A 4.5% CRR represents the central bank's monetary policy stance, balancing liquidity needs and inflation control.

Multiple choice

The difference between simple interest and compound interest on a sum of money at 6% per annum for 2 years is Rs. 216. Find the sum.

  1. Rs. 50,000

  2. Rs. 65,000

  3. Rs. 60,000

  4. Rs. 62,000

  5. Rs. 70,000
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

It is correct answer.

Let the sum be Rs x.

Therefore,  Simple Interest = x*6*2/100 = 0.12x           Compound Interest = x (1+6/100)^2 - x =0.1236x    

Difference in CI and SI =0.12x - 0.1236x = 0.0036x 

Difference which is given = 216 * 10000/36= 60,000

Multiple choice

Directions: Choose the correct option for the given question.

12th Finance Commission has recommended to merge and determine one single interest rate on various outstanding central loans to states having different interest rates. What is this recommended interest rate?

  1. 7.0%

  2. 7.5%

  3. 8.0%

  4. 8.5%
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The 12th Finance Commission, which made recommendations for the period 2005-10, suggested consolidating various central loans to states into a single interest rate of 7.5%. This was intended to simplify the fiscal relationship between the center and states.

Multiple choice

The true discount on a bill due by 6 months at 12% per annum is Rs. 189. Find the amount of the bill.

  1. Rs. 3150

  2. Rs. 3498

  3. Rs. 3339

  4. Rs. 3338

  5. Rs. 451.5
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Let present worth be Rs. x. Then, S.I. on Rs. x at 12% for 6 months=Rs. 189 Therefore, x * 12 *6/12 *1/100=189 x=3150 Present worth=Rs 3150 Amount=present worth+true discount
              =3150+189               =3339 It is the correct answer.