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 Compound Interest Questions

Popular Latest Rated Important Formulae

FACTS  AND  FORMULAE  FOR  COMPOUND  INTEREST  QUESTIONS

 

 

Let Principal = P, Rate = R% per annum, Time = n years.

I.

1.  When interest is compound Annually:

Amount =P1+R100n

2.  When interest is compounded Half-yearly:

Amount = P1+(R2)1002n

3.  When interest is compounded Quarterly:

Amount = P1+R41004n

 

II.

1.  When interest is compounded Annually but time is in fraction, say 325 years.

Amount = P1+R1003×1+25R100

2.  When Rates are different for different years, say R1%, R2%, R3% for 1st, 2nd and 3rd year respectively.

Then, Amount = P1+R11001+R21001+R3100

 

III.  Present worth of Rs. x due n years hence is given by:

Present Worth = x1+R100n

Q:

The compound interest on a certain sum for 2 years at 10% per annum is Rs. 525. The simple interest on the same sum for double the time at half the rate percent per annum is

A) Rs.4000 B) Rs.500
C) Rs.600 D) Rs.800
 
Answer & Explanation Answer: B) Rs.500

Explanation:

Let the sum be Rs. P.

Then,[p(1+10/100)2-p]=525

Sum =Rs.2500

S.I.= Rs.(2500*5*4)/100


= Rs. 500

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10 21703
Q:

The difference between simple and compound interest compounded annually on a certain sum of money for 2 years at 4% per annum is re.1. the sum is

A) 625 B) 630
C) 640 D) 650
 
Answer & Explanation Answer: A) 625

Explanation:

sum=Rs.x

C.I=[x(1+4/100)^2-x]=(676/625x-x)=51/625

S.I=(x*4*2)/100=2x/25

x=625

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15 21531
Q:

The difference between simple interest and compound interest on Rs. 1200 for one year at 10% per annum reckoned half yearly is

A) Rs.2.50 B) Rs.3
C) Rs.4 D) Rs.4.50
 
Answer & Explanation Answer: B) Rs.3

Explanation:

S.I

= Rs.(1200x10x1/100)

= Rs.120.

 

C.I

= Rs[(1200x1+5/100)² -1200]

= Rs.123. 

 

Difference

= Rs.[123-120]

= Rs. 3.

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28 20287
Q:

Rs.100 doubled in 5 years when compounded annually. How many more years will it take to get another Rs.200 compound interest

A) 3years B) 5years
C) 6years D) 7years
 
Answer & Explanation Answer: B) 5years

Explanation:

Rs.100 invested in compound interest becomes Rs.200 in 5 years.

The amount will double again in another 5 years.

i.e., the amount will become Rs.400 in another 5 years.

So, to earn another Rs.200 interest, it will take another 5 years.

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13 17817
Q:

A sum of money invested at compound interest amounts to Rs. 800 in 3 years and to Rs. 840 in 4 years. The rate of interest per annum is

A) 6% B) 4%
C) 5% D) 7%
 
Answer & Explanation Answer: C) 5%

Explanation:

S.I. on Rs.800 for 1 year

=Rs[840 - 800]

= Rs.40

 

Rate

=(100x40/800x1)%

= 5%

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14 17267
Q:

If you deposit $6500 into an account paying 8% annual interest compounded monthly, how
much money will be in the account after 7 years?

A) 11358.24 B) 12334
C) 15789 D) 12386
 
Answer & Explanation Answer: A) 11358.24

Explanation:

FV=P(1+r/n)^nt

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18 15862
Q:

Albert invested an amount of Rs. 8000 in a fixed deposit scheme for 2 years at compound interest rate 5 p.c.p.a. How much amount will Albert get on maturity of the fixed deposit

A) Rs.8820 B) Rs.8620
C) Rs.8520 D) Rs.8320
 
Answer & Explanation Answer: A) Rs.8820

Explanation:

 

Amount = Rs.8000*1+51002=Rs.8820

 

 

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12 15353
Q:

What will be the compound interest on a sum of Rs.25,000 after 3 years at the rate of 12 p.c.p.a?

A) Rs.10123.20 B) Rs.12100
C) Rs.12552 D) Rs.12665
 
Answer & Explanation Answer: A) Rs.10123.20

Explanation:

Amount

= Rs.(25000x(1+12/100)³

= Rs.(25000x28/25x28/25x28/25)

= Rs. 35123.20.

 

C.I = Rs(35123.20 -25000)

= Rs.10123.20

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