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

Priya lended a certain amount for 2 years at compound interest on which she recieved Rs. 282.15 as interest. If the simple interest on the same amount is Rs. 12.15 less than its compound interest, then which of the following represents the sum and the rate of interest?

  1. Rs. 500 and 9%

  2. Rs. 1500 and 9%

  3. Rs. 1540 and 11%

  4. Rs. 1900 and 12%

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

For 2 years, the difference between compound interest (CI) and simple interest (SI) is given by the formula: Difference = P * (r/100)^2. Here, 12.15 = P * (r/100)^2. Also, SI = P * r * 2 / 100 = 282.15 - 12.15 = 270. From SI, P * r = 13500. Substituting P = 13500/r into the difference formula: 12.15 = (13500/r) * (r^2 / 10000) = 1.35 * r. Thus, r = 12.15 / 1.35 = 9%. Then P = 13500 / 9 = 1500.

Multiple choice

If a sum of money amounts to Rs. 7896 after 4 years and to Rs. 14,576 after 8 years on compound interest, find the approximate sum.

  1. Rs. 3845

  2. Rs. 4277

  3. Rs. 4526

  4. Rs. 2563

  5. Rs. 2536
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Let the principal be P and the compounding factor for 4 years be x = (1 + r)^4. We are given P * x = 7896 and P * x^2 = 14,576. Dividing the second equation by the first gives x = 14,576 / 7896, which is approximately 1.846. Substituting this back into the first equation, we find P = 7896 / 1.846, which is approximately Rs. 4277.

Multiple choice

Sumit lent a sum of Rs. 3100 partly at 4% per annum and partly at 9% per annum simple interest. The total interest received after 4 years was Rs. 540. What would be the ratio of the amount lent at 4% to that lent at 9%?

  1. 14 : 11

  2. 144 : 11

  3. 11 : 144

  4. 124 : 15

  5. 15 : 124
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Let x be the amount at 4%. (x * 4 * 4)/100 + ((3100-x) * 9 * 4)/100 = 540. 16x + 111600 - 36x = 54000. 20x = 57600. x = 2880. Amount at 9% = 3100 - 2880 = 220. Ratio = 2880:220 = 288:22 = 144:11.

Multiple choice

Audrey, a businessman based in New York, earns a profit of $20,000 and decides to invest the same in short-term corporate bond funds for 9 months. These funds guarantee to pay 2 percent interest at the end of 3 months, another 3 percent interest at the end of 6 months, and 4 percent interest at the end of the 9-month contract. If he never withdraws any amount of money during the entire duration, what will be the total amount of interest earned by Audrey?
  1. $1,400.00
  2. $1,600.00
  3. $1,852.48
  4. $1,881.33
  5. $1,995.45
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The interest is calculated sequentially: 20000 * 0.02 = 400 (after 3 months). New principal is 20400. 20400 * 0.03 = 612 (after 6 months). New principal is 21012. 21012 * 0.04 = 840.48 (after 9 months). Total interest = 400 + 612 + 840.48 = 1852.48.

Multiple choice

Ms. Melissa opened a savings account in Wells Fargo Bank and deposited a certain amount of money. The amounts of interest earned by her in the 3rd and 4th years were $900 and $1,000, respectively, compounded annually. Calculate the rate of interest.

  1. 9%

  2. 9.27%

  3. 10.50%

  4. 11.11%

  5. 12.50%
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Let P be the principal and r be the rate. Interest in year 3 is P(1+r)^2 * r = 900. Interest in year 4 is P(1+r)^3 * r = 1000. Dividing the two equations: (1+r) = 1000/900 = 10/9. Thus, r = 1/9 = 11.11%.

Multiple choice

Keinstein Fisheries borrowed some money to grow their business. They borrowed $2,000 at compound interest of 5% per annum for 1 year. Thereafter, they took another loan at simple interest for 2 years, such that they had to pay simple interest equal to half the amount of compound interest paid by them earlier. What would be the amount of money borrowed by them at 4% rate per annum?
  1. $550
  2. $625
  3. $730
  4. $855
  5. $965
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Compound interest on 2000 at 5% for 1 year = 2000 * 0.05 = 100. Simple interest = 100 / 2 = 50. SI = P * R * T / 100 => 50 = P * 4 * 2 / 100 => 50 = 0.08P => P = 625.

Multiple choice

Josh and Javier invested same amount of money each in partnership for an investment plan in Transamerica Corporation. The corporation provided an overall amount of \$300 including simple interest after 3 years. Josh and Javier calculated the overall amount including simple interest as to be \$360 that they could get after keeping their amount in the same plan for one more year. What was the amount of money invested by Javier in the plan?
  1. $60
  2. $90
  3. $120
  4. $175
  5. $180
Reveal answer Fill a bubble to check yourself
B Correct answer
Multiple choice

Mr. Jameson, a high end investor, was looking to invest \$1 million in funds that guarantee some return on his investments with no risk. So he took advice from Matthew, who is a financial expert. He suggested Mr. Jameson to invest some amount in High-Yield Savings Accounts and the remaining amount in Certificates of Deposits, they would give guaranteed return of 5% and 6% annually, respectively. If after one year he earned \$56,000 as an interest amount, then how much did he invest in High-Yield Savings Accounts?
  1. $350,000
  2. $400,000
  3. $460,000
  4. $500,000
  5. $600,000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Let x be the amount in High-Yield Savings and (1,000,000 - x) be the amount in CDs. Setting up the equation 0.05x + 0.06(1,000,000 - x) = 56,000 leads to 0.05x + 60,000 - 0.06x = 56,000. Solving for x gives 0.01x = 4,000, so x = 400,000.

Multiple choice

Donald, a farmer, deposited \$64,000 in a State Farm Bank deposit scheme for two years and got a simple interest of \$16,000. He withdrew the entire amount after 2 years including interest and deposited in Comercia Bank's saving scheme which offered 2.5% extra interest as compared to State Farm Bank and that too compounded annually. Calculate the total compound interest obtained by Donald after 2 years.
  1. $26,400
  2. $25,800
  3. $24,000
  4. $22,600
  5. $20,800
Reveal answer Fill a bubble to check yourself
B Correct answer