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. Ashok invested a certain amount in a business venture that assured 8% per annum simple interest. After three years, if he got back Rs. 2400 more than what he had invested, the principal amount that he invested was

  1. Rs. 2,40,000

  2. Rs. 10,000

  3. Rs. 1,00,000

  4. Rs. 2400

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

Simple interest I = P * r * t / 100. Given I = 2400, r = 8, t = 3. So 2400 = P * 8 * 3 / 100. 2400 = P * 24 / 100. P = 2400 * 100 / 24 = 10000.

Multiple choice

The simple interest on a sum of money will be Rs. 600 after 10 years. If the principal is tripled after 5 years, what will be the total interest at the end of the tenth year?

  1. Rs. 600

  2. Rs. 900

  3. Rs. 1,200

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

SI = P*R*T/100. 600 = P*R*10/100 => PR = 6000. Interest for first 5 years = P*R*5/100 = 6000*5/100 = 300. Principal becomes 3P. Interest for next 5 years = (3P)*R*5/100 = 3 * (P*R*5/100) = 3 * 300 = 900. Total interest = 300 + 900 = 1200.

Multiple choice

A leading financial company in California intends to invest \$100 000 in two types of bonds 'X' and 'Y' at the annual interest rate of 5% and 6% per annum. How much amount should the company invest in the two types of bonds separately to get an interest of \$5 400 from the two bonds?
  1. X: $40,000, Y: $60,000
  2. X: $50,000, Y: $50,000
  3. X: $30 000, Y: $70 000
  4. X: $60 000, Y: $40 000
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Let x be the amount in bond X and (100,000 - x) be the amount in bond Y. 0.05x + 0.06(100,000 - x) = 5,400. 0.05x + 6,000 - 0.06x = 5,400. -0.01x = -600. x = 60,000. So X = 60,000 and Y = 40,000.

Multiple choice

A sum of money is invested at compound interest at a certain rate. If the simple interest at the same rate is calculated, then the simple interest for the first two years comes out to be Rs. 20 less than the compound interest for the same number of years, and that for the first three years, comes out be Rs. 61 less than the compound interest for the same number of years. Find the rate.

  1. 10%

  2. 7%

  3. 5%

  4. 3%

  5. 4%
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Let P be the principal and r be the rate. CI for 2 years = P(1+r)^2 - P = P(2r + r^2). SI for 2 years = P(2r). Difference = Pr^2 = 20. CI for 3 years = P(1+r)^3 - P = P(3r + 3r^2 + r^3). SI for 3 years = P(3r). Difference = P(3r^2 + r^3) = 61. Dividing the two: (3r^2 + r^3) / r^2 = 61 / 20, so 3 + r = 3.05, which means r = 0.05 or 5%.

Multiple choice

The compound interest earned by Suresh on a certain amount at the end of two years at the rate of 8 % p.a. was Rs. 1,414.40. What was the total amount that Suresh got back at the end of two years?

  1. Rs. 9,414.40

  2. Rs. 9,914.40

  3. Rs. 9,014.40

  4. Rs. 8,914.40

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

CI = P((1+r)^n - 1). 1414.40 = P((1.08)^2 - 1) = P(1.1664 - 1) = P(0.1664). P = 1414.40 / 0.1664 = 8500. Total amount = 8500 + 1414.40 = 9914.40.

Multiple choice

Sushma invested a fixed amount of money at compound interest for 2 years and got an amount of Rs. 4080 as compound interest. Find the rate of interest and sum, if simple interest on the same amount for the same period of time is Rs. 4000.

  1. 4%, Rs. 40,000

  2. 5%, Rs. 50,000

  3. 6%, Rs. 40,000

  4. 4%, Rs. 50,000

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

Simple interest for 2 years is 4000, so SI for 1 year is 2000. Compound interest for 2 years is 4080. The difference between CI and SI for 2 years is (P * r^2) / 100^2 = 80. Since SI = (P * r * 2) / 100 = 4000, we have P * r = 200,000. Substituting into the difference formula: (200,000 * r) / 10,000 = 80, so 20r = 80, r = 4%. Then P = 200,000 / 4 = 50,000.

Multiple choice

A sum of Rs. 16,800 is divided into two parts. One part is lent at simple interest at a rate of 6% per annum and the other is lent at simple interest at a rate of 8% per annum. After 2 years, the total sum received is Rs. 19,000. The sum lent at the rate of 6% simple interest was

  1. Rs. 12,200

  2. Rs. 12,000

  3. Rs. 11,000

  4. Rs. 10,000

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

Let x be the sum at 6%. Then (16800-x) is at 8%. Interest = (x * 0.06 * 2) + ((16800-x) * 0.08 * 2) = 19000 - 16800 = 2200. 0.12x + 2688 - 0.16x = 2200 => 0.04x = 488 => x = 12200.

Multiple choice

A sum is invested at compound interest payable annually. The interest in two successive years, starting from the first year, was Rs. 500 and Rs. 540. The sum is

  1. Rs. 3750

  2. Rs. 5600

  3. Rs. 6250

  4. Rs. 7000

  5. Rs. 7200
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

In compound interest, the interest for the second year is the first year's interest plus interest on that interest. 540 = 500(1 + r). So 1 + r = 540/500 = 1.08. r = 8%. Since 500 is the interest on the principal for one year at 8%, P * 0.08 = 500, P = 500 / 0.08 = 6250.