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

A sum of Rs. 1089 becomes Rs. 1296 in two years at a compound interest, which is compounded annually. The rate of interest will be

  1. 8%

  2. 10%

  3. 9.09%

  4. 11%

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

Using the compound interest formula, the ratio of the amount to the principal after two years is 1296/1089, which simplifies to (36/33)^2 or (12/11)^2. Taking the square root of both sides gives 1 + R/100 = 12/11, which simplifies to R/100 = 1/11. This yields an annual interest rate of approximately 9.09%.

Multiple choice

What will be the compound interest on a certain amount for a year payable half-yearly at the same rate of interest if the simple interest on the same amount for 2 years at 6% per annum is Rs. 840?

  1. Rs. 420

  2. Rs. 852.60

  3. Rs. 426.30

  4. Rs. 613.15

  5. Rs. 640
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

SI for 2 years = 840, so SI for 1 year = 420. Rate = 6%. Principal P = (420 * 100) / (6 * 1) = 7000. For compound interest, rate is 6% per annum, so 3% per half-year. For 1 year (2 half-years), CI = 7000 * (1 + 0.03)^2 - 7000 = 7000 * 1.0609 - 7000 = 426.30.

Multiple choice

Ram invested half of his savings in a bond that paid simple interest for 2 years and received Rs. 550 as interest. He invested the remaining amount in a bond that paid compound interest for 2 years at the same rate of interest and received Rs. 605 as interest. What was the value of his total savings before investing in the two bonds?

  1. Rs. 2,750

  2. Rs. 4,000

  3. Rs. 2,000

  4. Rs. 7,000

  5. Rs. 10,000
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Let S be total savings. Half is S/2. SI = (S/2 * R * 2) / 100 = 550 => SR = 55000. CI = S/2 * ((1+R/100)^2 - 1) = 605. S/2 * (2R/100 + R^2/10000) = 605. SR/100 + SR^2/20000 = 605. 550 + (550*R)/200 = 605. 2.75R = 55. R = 20%. SR = 55000 => S*20 = 55000 => S = 2750.

Multiple choice

An investment plan offers a certain rate of interest compounded annually. If the difference between the amount received after 2 years and the principal invested in the investment plan is (21/100) times the principal amount, the rate of interest is

  1. 14%

  2. 12%

  3. 10%

  4. 15%

  5. 20%
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Amount = P(1 + r/100)^2. Difference = Amount - P = P((1 + r/100)^2 - 1) = 0.21P. (1 + r/100)^2 - 1 = 0.21. (1 + r/100)^2 = 1.21. 1 + r/100 = 1.1. r/100 = 0.1, r = 10%.

Multiple choice

Dinesh Patel is a businessman. He gives loan to the needy, but charges good amount of interest. Jitesh took a loan of Rs. 1,50,000 from Dinesh. The amount of simple interest charged by Dinesh is for as many years as the rate of interest. If Jitesh paid Rs. 96,000 as interest at the end of the loan period, what was the rate of interest?

  1. 32%

  2. 8%

  3. 10%

  4. 0.8%

  5. 16%
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Simple interest formula: I = (P * R * T) / 100. Given I = 96000, P = 150000, and R = T. So 96000 = (150000 * R * R) / 100. 960 = 1500 * R^2 / 100 => 960 = 15 * R^2 => R^2 = 64 => R = 8%.

Multiple choice

Marketable lots are 25 shares in the market. Mr. Amen has Rs. 25000 surplus amount to invest for a year in stocks or other investment plans. He has five options: (A) 10%, Rs.100 shares at Rs. 125 (B) 12%, Rs. 80 shares at Rs. 100. (C) 15%, Rs. 200 shares at Rs. 250. (D) Simple interest at the rate of 18% (E) Compound interest of 10% compounded bi-annually. The best investment plan is

  1. A

  2. B

  3. C

  4. D

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

Compare effective annual yields: (A) 10% dividend on Rs. 125 = 8%. (B) 12% on Rs. 80 = 12/80 = 15%. (C) 15% on Rs. 250 = 15/250 = 6%. (D) Simple interest = 18%. (E) 10% compounded bi-annually = (1 + 0.05)^2 - 1 = 10.25%. 18% is the highest.