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 Simple Interest Questions

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FACTS  AND  FORMULAE  FOR  SIMPLE  INTEREST  QUESTIONS

 

 

1. Principal: The money borrowed or lent out for a certain period is called the principal or the sum.

 

2. Interest: Extra money paid for using other's money is called interest

 

3. Simple Interest (S.I.) : If the interest on a sum borrowed for a certain period is reckoned uniformly, then it is called simple interest.

Let Principal = P, Rate = R% per annum (p.a.) and Time = T years. Then,

(i)  S.I=P×T×R100

(ii)  P=100×S.IR×T ; R=100×S.IP×T and T=100×S.IP×R

Q:

Find the simple interest charged on borrowing $325 for 5 years at 3% p.a. (per annum or per year) interest.

A) 59 B) 46
C) 48.75 D) 34.75
 
Answer & Explanation Answer: C) 48.75

Explanation:

I= PTR100

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Q:

A sum of Rs. 10,000 is lent partly at 6% and the remaining at 10% p.a. If the yearly interest on the average is 9.2%, the money lent at 10% is:-

A) Rs. 8000 B) Rs. 8500
C) Rs. 5000 D) Rs. 2000
 
Answer & Explanation Answer: A) Rs. 8000

Explanation:

Let the amount at 6% be x
Amount at 10% be (10000 –x)
At 9.2 % interest, SI = 10000 X 9.2 X 1/100 = 920
Amount = 10920
⇒ 6x/100 + (10000 – x)10/100 = 920
⇒ 6x – 10x + 100000 = 92000
⇒ 4x = 8000
⇒ x = 2000
Money lent at 10 % = 10000 – 2000 = 8000

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Q:

A bank offers 9% p.a. simple interest on an investment. At the end of 4 years the interest earned was $215. How much was invested?

A) 597.22 B) 345
C) 456 D) 378
 
Answer & Explanation Answer: A) 597.22

Explanation:

I = (p x r x t)/100

 

 

 

 

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Q:

Find the principal which yields $25,000 when invested at 3% annually for 20 years.

A) 13841.89 B) 14821
C) 13468 D) 57389
 
Answer & Explanation Answer: A) 13841.89

Explanation:

P=F1+in

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Q:

If there is a total of 104 weekly instalments and a thirddeposit, find the interest charged

A) 237.55 B) 337
C) 443 D) 334
 
Answer & Explanation Answer: A) 237.55

Explanation:

Cash price = $3695

Deposit =1/3 of $3695 = $1231.67

Loan amount = $3695.00 − $1231.67 = $2463.33

Total cost of loan = $25.97 × 104= $2700.88

 

Interest charged = total amount − loan
I = A − P
= 2700.88 − 2463.33
= 237.55

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Q:

The difference between the interests earned when Rs. P is invested for four years in a scheme offering 9% p.a. Simple interest and when the same sum (Rs P) is invested for two years in another scheme offering 12% p.a. simple interest, is Rs 480. What is the value of P?

A) 2000 B) 3500
C) 2500 D) 4000
 
Answer & Explanation Answer: D) 4000

Explanation:

p=(p*4*9)/100-(p*2*12)/100 = 480

=12p/100=480

p=4000

 

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Q:

loan of $15 000 is taken out. If the interest rate on the loan is 7%, how much interest is due and what is the amount repaid if the loan was taken out on April 7 and is due in seven months

A) 13615.52 B) 14615.52
C) 15615.52 D) 16615.52
 
Answer & Explanation Answer: C) 15615.52

Explanation:

I = prt = [15000 × 0.07 × (214/365) ]=615.52

Future value, S = P + I = $15 000 + $615.52 = $15 615.52

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Q:

A loan of $15 000 is taken out. If the interest rate on the loan is 7%, how much interest is due and what is the amount repaid if the loan is due in seven months

A) 15612.50 B) 14612.50
C) 13612.50 D) 17612.50
 
Answer & Explanation Answer: A) 15612.50

Explanation:

We have P = 15 000, r = 0.07 and since the actual date the loan was taken out
is not given, we use t =7/12

I = Prt=$15 000* 0.07* 7/12 = $612.50

Amount repaid = Future or accumulated value,

S = P + I = $15 000 + $612.50 = $15 612.50

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