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

Interest charged on drawings is Rs. 1,200. The correct entry is

  1. Capital A/c Dr 1,200
    To Interest on drawings a/c 1,200
  2. Drawings A/c Dr 1,200
    To Cash A/c 1,200
  3. Interest on drawings A/c Dr 1,200
    To Drawings A/c 1,200

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

Interest on drawings is an income for business, so it will be credited. And it will be charged from the capital account of partners, so Capital account will be credited.

Multiple choice

Consider a bond which offers 10% p.a. rate of interest to be compounded half yearly. What is the effective rate of interest per annum?

  1. 10%

  2. 10.25%

  3. 5%

  4. 20%
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Suppose Rs. 100 is invested. The rate per annum is 10%, i.e. 5% per half year. The amount after first half year will be 100 + 5%, i.e. Rs. 105 and amount after second half year, i.e. one year will be 105 + 5%, i.e. Rs. 110.25. Thus, effective rate of interest per annum is 110.25 - 100 = 10.25%.

Multiple choice

Ravi borrowed a sum of money from the bank at an interest of 10.5% per annum and for 2.5 years. If he paid an interest of Rs.1863.75, which of the following could be the total sum borrowed by Ravi?

  1. Rs. 5140

  2. Rs. 7600

  3. Rs. 7100

  4. Rs. 6330

  5. Rs. 7231
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Rate of interest = 10.5 = 21/2% p.a. Simple Interest (S.I) = Rs.1863.75 T = 2.5 = 5/2 years Principal (P) =  (S.I x 100) / (R x T) = (1863.75 x 100 x 2 x 2) / (21 x 5) = Rs. 7100

Multiple choice business organisation and correspondence classification of busniess activities concept and types of commerce and industry nature of industries and commerce operative activities in business business as an activity meaning and types of trade trade and aids to trade

If you are going to put Rs. $1,00,000$ in a fixed deposit for a year at $10\%$ rate of interest, then you know how much interest your money will earn. What kind of a decision-making condition is this?

  1. Certain

  2. Uncertain

  3. Risk

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

A decision-making condition is 'certain' when the outcome is known with full information and no variability, such as a fixed deposit interest rate.

Multiple choice banks introduction, recurring deposit accounts and calculation of interest on a fixed deposit account banking and taxation banking maths

In which account interest is calculated half yearly on the minimum balance between $11^{th}$ and the last day of the month?

  1. fixed deposit

  2. recurring deposit

  3. saving deposit

  4. current deposit
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

In saving deposit account interest is calculated half yearly on the minimum balance between $11^{th}$ and the last day of the month.

Multiple choice banks introduction, recurring deposit accounts and calculation of interest on a fixed deposit account banking and taxation banking maths

The rates of simple interest in two banks A and B are in the ratio 5 : 4. A person wants to deposit his total savings in two tanks in such a way that he received equal half yearly interest form both. He should deposit the savings in banks A and B in the ratio of

  1. 2 : 5

  2. 4 : 5

  3. 5 : 2

  4. 5 : 4
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

We know that $ SI = \dfrac {PNR}{100} $
We clearly see that when Simple Interest and the time $ N $ is constant or same, then Principal $ P $ varies inversely with $ R $
So, if $ R $ is in the ratio $ 5:4 $ then $ P $ deposited should be in the inverse $ 4: 5 $