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

Amita borrowed Rs. 10,000 at simple interest for 2 years at 10% & she lent it to her friend immediately for the same time & at the same rate at compound interest. How much money will she gain?

  1. 200

  2. 100

  3. 150

  4. 250

  5. 175
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

(S.I. for two years = Rs. 10,000 X 2 X 10 = Rs. 2000  100 Interest for first year = Rs. 10000 X 1 X 10 = Rs.1000   100 Interest for second year = Rs. 1000 + 10% of Rs. 1000 = Rs. 1100 Total interest for 2 years (C.I.) = Rs. 2100 Difference = Rs. 100)

Multiple choice

On 1st April, A draws a bill of 3 months on B for Rs. 5,000 for mutual accommodation. The bill was discounted with bank on 4th May at 24% p.a. discount. A sends 1/5th of the proceeds to B. Calculate the amount sent by A to B.

  1. Rs. 940

  2. Rs. 1,000

  3. Rs. 960

  4. Rs. 3,840
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Discounting charges of bill = 5,000*24%2/12 = Rs. 200 Thus amount received from bank = Rs. 4, 800 Sent to B = Rs. 4800*1/5 = Rs. 960 If the bill had been discounted on 4th April, with discount charges Rs. 300 and amount sent would be 1/5(5000-300) i.e. Rs. 940. 1/5th of the face value of bill amounts to Rs. 1, 000. The amount retained by A is 4,800-960 = Rs. 3840

Multiple choice

Rs. 800 becomes Rs. 956 in 3 years at a certain rate of simple interest, If the rate of interest is increased by 4%, what amount will Rs. 800 becomes in 3 years?

  1. Rs. 1020.80

  2. Rs. 1025

  3. Rs. 1052

  4. Data Inadequate
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Simple interest = ( 956 - 800 ) = 156, Rate = ( 100 ´ 156 ) / 800 ´ 3 % = 13/2 % New Rate = ( 13/2 + 4 )% = 21/2 % New SI = ( 800 ´ 21/2 ´ 3/100 ) = 252 Therefore new amount = ( 800 + 252 ) = 1052

Multiple choice

Presently (from Sept 2010) bank rate in India is.............

  1. 6·0%

  2. 6.25%

  3. 6·75%

  4. 7·0%
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Presently (from Sept 2010) bank rate in India is 6·0%. The interest rate that is charged by a country's central or federal bank on loans and advances to control money supply in the economy and the banking sector is the bank rate. This is typically done on a quarterly basis to control inflation and stabilize the country's exchange rates which is 6% presently.

Multiple choice

As per the reports in the financial news papers the RBI, w.e.f. February 2007, has decided to pay some interest on the 'Cash reserve deposits' kept with it by various banks. What will be the rate of interest on such deposits?

  1. 0·5%

  2. 0·75%

  3. 1%

  4. 1·25%
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

In February 2007, the RBI decided to pay interest on Cash Reserve Ratio (CRR) balances held by banks at a rate of 0.5 percent, providing some relief to the banking sector.