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 person deposits Rs. 400 per month in a recurring deposit scheme for 12 months. If the maturity amount is Rs. 4950, find the rate of interest per annum.

  1. 2.5%

  2. 3.6%

  3. 4.8%

  4. 5.7%
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Total deposited = 400 * 12 = 4800. Interest = 4950 - 4800 = 150. Using the formula for recurring deposit interest: I = P * (n(n+1)/24) * (R/100), where P=400, n=12. 150 = 400 * (12*13/24) * (R/100) = 400 * 6.5 * R / 100 = 26R. R = 150/26 = 5.769%. The closest option is 5.7%.

Multiple choice

Catherine puts $\$ 1,100$ in an investment account that she expects will make $5\%$ interest for each three month period. However, after a year she realises she was wrong about the interest rate and she has $\$ 50$ less than she expected. Assuming the interest rate the account earns is constant, which of the following equations expresses the total amount of money, $x$, she will have after $t$ years using the actual rate?
  1. $x=1,100(1.04)^{4t}$
  2. $x=1,100(1.05)^{4t-50}$
  3. $x=1,100(1.04)^{t/3}$
  4. $x=1,100(1.035)^{4t}$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The expected amount was 1100(1.05)^(4t). The actual amount is 50 less, but the question asks for the equation using the actual rate. Since the interest is compounded every 3 months (4 times a year), the rate per period is 4% (1.04) to result in the observed difference.

Multiple choice

$A=p(1+r)^t$ , where $A$ is the total amount after $t$ years $P$ is the principal, $t$ is the time in years , $r$ is the rate of interest compounded annually. Sheetal saves \$ 5,000 in a saving account which gives $2$ % interest compounded annually. Calculate interest sheetal will get after four years.Express your answer to the nearest whole number.

  1. 412

  2. 512

  3. 521

  4. 421
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Amount = 5000 * (1 + 0.02)^4 = 5000 * (1.02)^4 = 5000 * 1.082432 = 5412.16. Interest = 5412.16 - 5000 = 412.16. Nearest whole number is 412.