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

Ankit deposited a certain amount in a bank for 2 years at 20% compound interest per annum. The same amount would have given Rs. 1928 more in interest, if it were put in a scheme providing 20% per annum interest compounded on a half-yearly basis. What was the sum that Ankit deposited in the bank?

  1. Rs. 20,000

  2. Rs. 40,000

  3. Rs. 60,000

  4. Rs. 80,000

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

Let the sum be P. Annual interest = P * ((1 + 0.2)^2 - 1) = 0.44P. Half-yearly interest = P * ((1 + 0.1)^4 - 1) = P * (1.4641 - 1) = 0.4641P. The difference is 0.4641P - 0.44P = 0.0241P = 1928. P = 1928 / 0.0241 = 80000.

Multiple choice

Jenny invested a certain sum of money in a scheme for two years. She receives compound interest of Rs. 756 and simple interest of Rs. 720. What will be the rate of interest, if the sum is invested in such a way that simple interest becomes Rs. 900 and the total number of years becomes equal to rate percent per annum?

  1. 8

  2. 9

  3. 3

  4. 5

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

For 2 years, SI = 720 implies SI for 1 year = 360. CI - SI = 756 - 720 = 36, which is the interest on the first year's interest. Thus, 36/360 = 10% rate. Using SI = P*R*T/100, 360 = P*0.10*1, so P = 3600. For the second part, SI = 900, P = 3600, and T = R. 900 = 3600 * R * R / 100, so R^2 = 25, R = 5.

Multiple choice

An automobile financier claims to be lending money at simple interest but he includes the interest every six months for calculating the principal. If he is charging an interest of 10%, the effective rate of interest becomes

  1. 10%

  2. 10.25%

  3. 10.5%

  4. 12%

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

With interest calculated every six months at 10% per annum, the rate for each half-year is 5%. The effective annual rate is calculated as (1 + 0.05)^2 - 1 = 1.1025 - 1 = 0.1025, or 10.25%.

Multiple choice

A certain sum of money is invested at an interest rate of 5% per annum and a second sum, twice as large as the first, is invested at 5.5% per annum. The total amount of interest earned from the two investments together is Rs. 1000 per year and the interest is withdrawn every year. The second sum invested is

  1. Rs. 6250

  2. Rs. 10,500

  3. Rs. 12,500

  4. Rs. 15,000

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

Let the first sum be x. The second is 2x. Interest = 0.05*x + 0.055*(2x) = 1000. 0.05x + 0.11x = 1000. 0.16x = 1000. x = 6250. The second sum is 2x = 12500.

Multiple choice

On a certain amount, simple interest accrued at 12% per annum rate of interest for 6 years is Rs. 25,920. What will be the compound interest (in Rs.) accrued on the same amount at 8% per annum rate of interest compounding annually for 2 years?

  1. 4,326.30

  2. 5,563.40

  3. 5,888.60

  4. 5,990.40
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Principal = (25920 * 100) / (12 * 6) = 2592000 / 72 = 36000. Compound interest for 2 years at 8 percent = 36000 * ((1 + 8/100)^2 - 1) = 36000 * (1.1664 - 1) = 36000 * 0.1664 = 5990.40.