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

Mr. Ahuja invested Rs. 'N' in an index fund and earned a simple interest of 20% per annum and invested Rs. (N + 1000) in an Mutual fund and earned a compound interest 20% per annum. The amount received after 2 years from the Mutual fund is Rs. 2000 more than that from the index fund. Find the sum invested in the Mutual fund.

  1. Rs. 15,000

  2. Rs. 14,000

  3. Rs. 13,500

  4. Rs. 18,000

  5. Rs. 12,000
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Simple Interest (SI) on N at 20% for 2 years = 0.4N. Amount = 1.4N. Compound Interest (CI) on (N+1000) at 20% for 2 years = (N+1000) * (1.2^2 - 1) = (N+1000) * 0.44 = 0.44N + 440. Amount = 1.44N + 1440. Difference = (1.44N + 1440) - 1.4N = 0.04N + 1440 = 2000. 0.04N = 560, so N = 14000. The sum in the mutual fund is N + 1000 = 15000.

Multiple choice

The difference between the compound interest and simple interest for two years on a certain sum at a certain rate of interest is Rs. 64. The compound interest for two years is Rs. 704. The principal is

  1. 800

  2. 1600

  3. 2400

  4. 3200
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

For 2 years, CI - SI = P * (r/100)^2 = 64. CI = P * ((1+r/100)^2 - 1) = 704. Dividing these: ((1+r/100)^2 - 1) / (r/100)^2 = 704/64 = 11. Let x = r/100. (1+x)^2 - 1 = 11x^2, so 1 + 2x + x^2 - 1 = 11x^2, 2x = 10x^2, x = 0.2. r = 20%. P * (0.2)^2 = 64, P * 0.04 = 64, P = 1600.

Multiple choice

A, B and C are partners. Their partnership deed provides for interest on drawings at 8% per annum. B withdraws a fixed amount in the middle of every month and his interest on drawings amounts to Rs. 4,800 at the end of the year. What is the amount of his monthly drawings?

  1. Rs. 10,000

  2. Rs. 5,000

  3. Rs. 1,20,000

  4. Rs. 48,000
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Interest on drawings for a fixed amount withdrawn in the middle of every month is calculated for 12 months. Formula: Interest = (Total Drawings * Rate * 6/12). 4800 = (x * 12 * 0.08 * 0.5), so 4800 = 0.48x, giving x = 10,000.

Multiple choice

How much amount is required to be invested every year so as to accumulate Rs. 3,00,000 at the end of 10 years, if interest is compounded annually at 10%? {Given: (1.1)10 = 2.5937}

  1. Rs. 18,823.65

  2. Rs. 18,828.65

  3. Rs. 18,832.65

  4. Rs. 18,182.65
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

This is a sinking fund problem. The formula for the annual payment A is A = FV * i / ((1+i)^n - 1). A = 300000 * 0.1 / ((1.1)^10 - 1) = 30000 / (2.5937 - 1) = 30000 / 1.5937 = 18824.12. Option A is the closest.

Multiple choice

Rs. 5000 is paid every year for 10 years to pay off a loan. What is the loan amount if interest be 14% per annum compounded annually? (P(10, 0.14) = 5,21611)

  1. Rs. 26,000.33

  2. Rs. 26,080.55

  3. Rs. 27,080.55

  4. Rs. 28,080.55
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The present value of an annuity is P = A * [(1 - (1+r)^-n) / r]. Given A = 5000, r = 0.14, n = 10. The provided factor P(10, 0.14) = 5.21611 corresponds to the annuity factor. Loan = 5000 * 5.21611 = 26080.55.

Multiple choice

A portion of $3,360 was invested at 6% simple interest per year, while the remaining was invested at 4% simple interest per year. If the annual income earned from the amount invested at 6% was double the amount invested at 4%, then what would be the total income from both the investments after 3 years?
  1. $115.20
  2. $172.80
  3. $345.60
  4. $518.40
  5. $718.20
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Let x be the amount at 6% and y be the amount at 4%. x+y=3360. Income 0.06x = 2 * 0.04y. 0.06x = 0.08y. x = 4/3 y. (4/3)y + y = 3360. 7/3 y = 3360. y = 1440. x = 1920. Annual income = 0.06(1920) + 0.04(1440) = 115.2 + 57.6 = 172.8. Total income for 3 years = 172.8 * 3 = 518.4.