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

Which of the following four situations would show linear growth of money?

  1. 3% of simple interest is added to the amount after every year.

  2. Money is increased by 3% of the amount that was in the previous year.

  3. Amount is doubled after every 3 years.

  4. 2% of compound interest is added to the amount after every year.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Linear growth occurs when a constant amount is added at each step. Simple interest adds a fixed percentage of the principal every year, which is a constant amount, thus representing linear growth. Compound interest and exponential growth involve adding a percentage of the current total, which leads to non-linear growth.

Multiple choice

On what sum of money will the difference between simple interest and compound interest for 2 years at 5% pa be equal to Rs. 63?

  1. Rs. 25,200

  2. Rs. 24,800

  3. Rs. 25,500

  4. Rs. 24,600

  5. Rs. 25,600
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The difference between simple interest and compound interest for 2 years is given by the formula D = P * (r/100)^2. Plugging in D = 63 and r = 5, we get 63 = P * (5/100)^2, which is 63 = P * (1/20)^2 = P / 400. Thus, P = 63 * 400 = 25200.

Multiple choice

A man borrows Rs. 4,000 at 15% compound interest. At the end of each year, he pays back Rs. 1,500. How much amount is required to pay at the end of third year to clear all his dues?

  1. Rs. 775.75

  2. Rs. 973.85

  3. Rs. 1,500

  4. Rs. 874.75
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Year 1: 4000 * 1.15 - 1500 = 3100. Year 2: 3100 * 1.15 - 1500 = 2065. Year 3: 2065 * 1.15 = 2374.75. After paying 1500 at the end of the third year, the remaining amount is 2374.75 - 1500 = 874.75.

Multiple choice

A bank offers 10% per annum interest. A customer deposits Rs. 3,600 each on 1st January and 1st July of a year. At the end of the year, the Compound interest earned is. (Compound Interest is calculated semi-annually)

  1. Rs. 549

  2. Rs. 2,232

  3. Rs. 558

  4. Rs. 279
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The first deposit of 3600 earns interest for 12 months (2 periods at 5% per period). The second deposit of 3600 earns interest for 6 months (1 period at 5%). Interest on first: 3600 * (1.05^2 - 1) = 3600 * 0.1025 = 369. Interest on second: 3600 * 0.05 = 180. Total interest = 369 + 180 = 549.

Multiple choice

If C is the compound interest on Rs. 10,000 for one year at 4% per annum when compounded quarterly, then which one of the following is correct?

  1. C < Rs. 100

  2. Rs. 100 < C < Rs. 200

  3. Rs. 200 < C < Rs. 400

  4. C > Rs. 400
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

For 10,000 at 4% per annum compounded quarterly, the rate per quarter is 1%. After 4 quarters, the amount is 10000 * (1.01)^4 = 10406.04. The interest C = 406.04. Since 406.04 > 400, option D is correct.

Multiple choice

A person borrowed Rs. 9,000 at 7%, Rs. 12,000 at 8% and Rs. 15,000 at 9% simple interest per annum. He had to pay Rs. 50,700 at the end of n years. What is the value of n?

  1. 3

  2. 4

  3. 5

  4. 6
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Total interest = 50700 - (9000 + 12000 + 15000) = 50700 - 36000 = 14700. Simple interest formula: I = P*R*T/100. 14700 = (9000*0.07*n) + (12000*0.08*n) + (15000*0.09*n). 14700 = (630 + 960 + 1350)n = 2940n. n = 14700 / 2940 = 5.