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

If the compound interest in the third year at 8% p.a. on a certain sum is Rs. 3,600, then what is the difference between the compound interest in the 4th and 5th year? (nearest to an integer in Rs.)

  1. Rs. 304

  2. Rs. 335

  3. Rs. 288

  4. Rs. 311
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Let P be the principal. CI for 3rd year = P(1+r)^2 * r = 3600. So P(1.08)^2 * 0.08 = 3600 => P * 1.1664 * 0.08 = 3600 => P = 3600 / 0.093312 = 38579.8. CI 4th year = P(1.08)^3 * 0.08 = 38579.8 * 1.2597 * 0.08 = 3888. CI 5th year = P(1.08)^4 * 0.08 = 38579.8 * 1.3605 * 0.08 = 4199.04. Difference = 4199.04 - 3888 = 311.04.

Multiple choice

Markela opens a bank account that earns interest at a rate of 2% compounded annually. She puts $200 in the account when she opens it and does not make any more deposits into or withdrawals from the account for 2 years. If the amount of money in the account after 2 years is given by the expression 200(1.02)2 , which of the following expressions gives the amount of money in the account after 1 year?

  1. 100(1.02)

  2. 200(1.02)

  3. 100(1.02)2

  4. 200(1.02)2
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Compound interest formula is A = P(1+r)^t. For 2 years, it is 200(1.02)^2. For 1 year, it is simply 200(1.02)^1, which is 200(1.02).

Multiple choice

A man made annual fixed deposits in a bank at the end of each year, earning a simple interest rate of 12% per annum for a duration of 6 years. When he visited the bank at the end of the 6th year to withdraw the money, he found that he had accumulated Rs. 6,240. What was the specific amount of money he used to deposit at the end of each year?

  1. Rs. 320

  2. Rs. 620

  3. Rs. 900

  4. Rs. 800
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Let the annual deposit be x. The deposits earn simple interest for 5, 4, 3, 2, 1, and 0 years respectively. The total amount is 6x + x * 0.12 * (5+4+3+2+1) = 6x + 0.12 * 15x = 6x + 1.8x = 7.8x. Setting 7.8x = 6240 gives x = 800.

Multiple choice

Wilson invested Rs. 'M' in fund-1 and received an interest of Rs. 7,150 in two years at the rate of 20 percent compounded annually. If he invested Rs. (M + 3,750) in fund-2 and got 12.5% p.a. simple interest, then what is the interest received by him in fund-2 if he invested for 4 years?

  1. Rs. 10,000

  2. Rs. 11,000

  3. Rs. 12,000

  4. Rs. 10,800

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

Fund-1: M * (1.2^2 - 1) = 7150 => M * 0.44 = 7150 => M = 16250. Fund-2: Principal = 16250 + 3750 = 20000. Interest = (20000 * 12.5 * 4) / 100 = 20000 * 0.5 = 10000.