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

Jeff invested £39553 at the rate of 2.5% per annum. Find the amount he will get if the interest is compounded quarterly for 6 years.

  1. £45932.58

  2. £44814.5

  3. £43945.28

  4. £43546.25
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Principal P = 39553. Rate r = 2.5% per annum = 0.625% per quarter. Time n = 6 years = 24 quarters. Amount = P(1 + r/100)^n = 39553 * (1 + 0.00625)^24 = 39553 * (1.00625)^24. (1.00625)^24 is approx 1.16129. 39553 * 1.16129 = 45932.58.

Multiple choice

A sum of money is invested at compound interest payable annually. The interest in the first two successive years is Rs. 2000 and Rs. 2500 respectively. Find the rate of interest.

  1. 15%

  2. 25%

  3. 20%

  4. 30%
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Let the principal be P and rate be r. Interest for year 1 = Pr = 2000. Interest for year 2 = (P + Pr)r = 2500. So, Pr + Pr^2 = 2500. Substituting Pr = 2000, we get 2000 + 2000r = 2500, so 2000r = 500, r = 0.25 or 25%.

Multiple choice

John borrowed ₹3,000 from Mohan at 10% p.a. for 3 years. At the end of each of the first two years, he paid ₹800 in total, which included that year's interest and part of the principal. At the end of the 3rd year, what amount must he pay to clear the remaining debt?

  1. Rs. 2,145

  2. Rs. 2,000

  3. Rs. 2,045

  4. Rs. 2,100

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

Year 1: Interest = 3000 * 0.1 = 300. Payment 800 covers 300 interest, 500 principal. Balance = 2500. Year 2: Interest = 2500 * 0.1 = 250. Payment 800 covers 250 interest, 550 principal. Balance = 1950. Year 3: Interest = 1950 * 0.1 = 195. Total to pay = 1950 + 195 = 2145.

Multiple choice

A man 'A' borrows Rs. 3000 at 6% per annum from 'B'; each year he pays Rs. 400 for interest and part of payment of the debt. What amount does A owe at the end of 3 years?

  1. Rs. 1800.00

  2. Rs. 2299.61

  3. Rs. 2200.00

  4. Rs. 2199.60

  5. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Year 1: Interest = 3000 * 0.06 = 180. Payment = 400. Principal reduction = 400 - 180 = 220. New principal = 2780. Year 2: Interest = 2780 * 0.06 = 166.8. Principal reduction = 400 - 166.8 = 233.2. New principal = 2546.8. Year 3: Interest = 2546.8 * 0.06 = 152.808. Principal reduction = 400 - 152.808 = 247.192. Final amount = 2546.8 - 247.192 = 2299.608.

Multiple choice

A certain sum of money at certain rate of interest amounts to Rs. 5900 in 3 years and Rs. 7400 in 8 years. It will amount to Rs. 8000 at the same rate of interest in

  1. 11 years

  2. 10 years

  3. 16 years

  4. 13 years

  5. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Simple interest: Amount in 8 years - Amount in 3 years = 5 years interest = 7400 - 5900 = 1500. Interest per year = 300. Principal = 5900 - 3*300 = 5000. We want amount = 8000, so interest needed = 3000. Time = 3000 / 300 = 10 years.

Multiple choice

A man borrows money at 6% per annum, interest payable yearly, and lends it immediately at 6% per annum, compound interest payable half-yearly and thereby gains Rs. 45 at the end of the year. What was the sum borrowed?

  1. Rs. 50,000

  2. Rs. 40,500

  3. Rs. 55,000

  4. Rs. 60,000

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

Let P be the sum. Simple interest at 6% is 0.06P. Compound interest half-yearly at 6% per annum (3% per half-year) for one year is P(1 + 0.03)^2 - P = P(1.0609) - P = 0.0609P. The gain is 0.0609P - 0.06P = 0.0009P. Setting 0.0009P = 45 gives P = 45 / 0.0009 = 50,000.

Multiple choice

Alison deposits $500 into a new savings account that earns 5 percent interest compounded annually. If Alison makes no additional deposits or withdrawals, how many years will it take for the amount in the account to double?

  1. 14

  2. 15

  3. 19

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

Using the compound interest formula A = P(1 + r)^t, we want 2P = P(1.05)^t, so 2 = (1.05)^t. Using logarithms or estimation, 1.05^14 is approximately 1.98 and 1.05^15 is approximately 2.078. Therefore, it takes 15 years to exceed the doubling point.