Quantitative Aptitude

Simple and Compound Interest

3,394 Questions
All Simple interest and its inverse forms 768 Compound interest with annual compounding 742 Simple-interest growth and split sums 626 Difference between compound and simple interest 479 Half-yearly and quarterly compounding 252 Changing rates and fractional years 201 Installments (CI based) 190 Ratio of principal to interest 118 Population growth and depreciation 16

Simple and Compound Interest Questions

Multiple choice

A sum of money becomes Rs. 385 in 5 years at the rate of 8% per annum simple interest. Original sum was -

  1. Rs. 240

  2. Rs. 260

  3. Rs. 250

  4. Rs. 275
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Using simple interest formula: Amount = Principal(1 + rt). Here Amount = Rs. 385, rate r = 8% = 0.08, time t = 5 years. Substituting: 385 = P(1 + 0.08 × 5) = P(1 + 0.40) = P(1.40). Solving: P = 385/1.40 = 3850/14 = 275. The original principal sum was Rs. 275. The interest earned is Rs. 385 - Rs. 275 = Rs. 110, which checks out: 275 × 0.08 × 5 = 110.

Multiple choice

Find the correct relationship between given quantities. Quantity I: Ram invested a sum of Rs. 52,000 in a scheme offering compound interest at the rate of 10% per annum. Find the interest earned by him after 3 years. Quantity II: Rahim invested Rs. 28,750 in a scheme offering simple interest at the rate of 20% per annum. Find the interest earned by him after 3 years.

  1. Quantity I > Quantity II

  2. Quantity I < Quantity II

  3. Quantity I ≥ Quantity II

  4. Quantity I ≤ Quantity II

  5. Quantity I = Quantity II or No relation
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Quantity I: CI = 52000[(1 + 10/100)^3 - 1] = 52000[1.331 - 1] = 52000 × 0.331 = Rs. 17,212. Quantity II: SI = 28750 × 20 × 3/100 = Rs. 17,250. Since 17,212 < 17,250, Quantity I < Quantity II, making option B correct.

Multiple choice

A person invests Rs 500 at the starts of each year at 5% compound interest per annum. How much will he invest be at the end of 2nd year?

  1. 552.25

  2. 551.52

  3. 551.25

  4. 552.52
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Investing Rs 500 at 5% compound interest for 2 years: Amount = 500 × (1 + 0.05)² = 500 × 1.1025 = 551.25. The compound interest formula A = P(1 + r/100)² gives the final amount. Option A (552.25) incorrectly uses simple interest calculation.

Multiple choice

The simple interest on a sum at 8% per annum for 8 years is Rs 16000. What will be the compound interest on the same sum at one fourth of the above rate of interest for two years?

  1. 1020

  2. 980

  3. 1010

  4. 1015
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

SI equals P times R times T gives P equals 16000 divided by 0.08 times 8 equals 25000. CI at 2 percent for 2 years: 25000 times open bracket 1.02 squared minus 1 close bracket equals 25000 times open bracket 1.0404 minus 1 close bracket equals 25000 times 0.0404 equals 1010.

Multiple choice

Dheeraj has Rs. 45000 with him. Scheme B and C offers interest at the rate of 5% and 4% respectively. He wanted to invested his money in such a way that the interest received from these scheme after one year of investment is equal so how much money he should invest in scheme C?

  1. 20000

  2. 40000

  3. 10000

  4. 30000

  5. 25000
Reveal answer Fill a bubble to check yourself
E Correct answer
Explanation

Let amount in scheme C be x, so scheme B has (45000-x). SI from C at 4% = x × 4/100 × 1 = 0.04x. SI from B at 5% = (45000-x) × 5/100 × 1 = 0.05(45000-x). Equal interest: 0.04x = 0.05(45000-x). So 0.04x = 2250 - 0.05x. Therefore 0.09x = 2250, x = 25000. This matches the claimed answer.

Multiple choice

Find the correct relationship between given quantities. Find total interest incurred- Quantity I-Compound interest on Rs. 4800 for two years at rate of 16.67% per annum. Quantity II-Compound interest on Rs. 4000 for three years at rate of 12.5% per annum.

  1. Quantity I > Quantity II

  2. Quantity I ≥ Quantity II

  3. Quantity I< Quantity II

  4. Quantity I ≤ Quantity II

  5. Quantity I = Quantity II or relationship cannot be established
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Quantity I: P = 4800, r = 16.67% = 1/6, t = 2 years. CI for 2 years = P[(1 + r)² - 1] = 4800[(7/6)² - 1] = 4800[49/36 - 1] = 4800 × 13/36 = 1733.33. Quantity II: P = 4000, r = 12.5% = 1/8, t = 3 years. CI for 3 years = P[(1 + r)³ - 1] = 4000[(9/8)³ - 1] = 4000[729/512 - 1] = 4000 × 217/512 ≈ 1696.09. Since 1733.33 > 1696.09, Quantity I > Quantity II.

Multiple choice

What is the rate of interest per capita per annum? Statement I: Simple Interest accrued in two years on the same amount at the same rate of interest is Rs 44000. Statement II: The amount becomes Rs 154000 in two years on simple interest. Statement III: Difference between the compound interest and simple interest earned in two years on the amount invested is Rs 120.

  1. Only I and II

  2. Only II and III

  3. Only II

  4. Only I and III

  5. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Statements I and II together are sufficient. From I: SI for 2 years = Rs 44000, so annual SI = Rs 22000. From II: Amount after 2 years = Rs 154000, so Principal = 154000 - 44000 = Rs 110000. Rate = (22000/110000) × 100 = 20% per annum. Statement III is inconsistent with the calculated values - the difference between CI and SI for 2 years at 20% on Rs 110000 should be Rs 4400, not Rs 120.

Multiple choice

Mr. Rahul Ghosh wants to invest Rs. 50000 in a company. The current rate of interest is 9%. How much return will he receive at the end of 4 years if the interest is compounded yearly?

  1. 50000

  2. 70,579

  3. 100000

  4. 68000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Using compound interest formula A = P(1+r)^n: A = 50000 × (1+0.09)^4 = 50000 × 1.41158 = 70,579 (rounded). Compound interest earns interest on accumulated interest, unlike simple interest which would only be 50000 × (1 + 0.09×4) = 68,000.

Multiple choice

Mr. Raman deposit Rs. 2000 today in a bank which pays 10% interest compounded annually, How much will the deposit grow to after 4 years?

  1. Rs. 2930

  2. Rs. 2935

  3. Rs. 2928

  4. Rs. 2926
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Using compound interest formula A = P(1 + r)^n, where P=2000, r=0.10, n=4: A = 2000 × (1.10)^4 = 2000 × 1.4641 = 2928.20, which rounds to Rs. 2928. Compound interest means interest is earned on both principal and accumulated interest.