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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:

Jaclyn buys $50 000 worth of debentures in a company. She earns 9.5% p.a. simple interest, paid to her quarterly (that is, every 3 months). If the agreed period of the debenture was 18 months: calculate the total amount collected at the end of the term.

A) 8125 B) 9125
C) 7125 D) 6125
 
Answer & Explanation Answer: C) 7125

Explanation:

total interest=1187.50*6

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Q:

You put $750 into a certificate of deposit. Your simple annual interest rate is 4%. You receive a check for the interest at the end of each year. How long will it take to earn $150 in interest?

A) 5years B) 6years
C) 7years D) 8years
 
Answer & Explanation Answer: A) 5years

Explanation:

I=prt

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Q:

The difference between Simple Interest and Compound Interest at the rate of 12% on the same amount for 3 years is Rs. 112.32. What is the principal amount if interest is compounded annually?

A) Rs. 25000 B) Rs. 2500
C) Rs. 50000 D) Rs. 5000
 
Answer & Explanation Answer: B) Rs. 2500

Explanation:

Let the principal amount be Rs. x
Calculating SI:
SI for 1 year at 12% rate is Rs (12/100)*x. For 3 years it will be Rs (36/100)*x ------ (1)
Calculating CI:
For 1st year, Interest = (12/100)*x
For 2nd year, interest = (12/100)*x + (12/100)*x + (144/10000)*x
For 3rd year, interest = (12/100)*x + (12/100)*x + (12/100)*x + (144/10000)*x + (144/10000)*x + (1728/1000000)*x. ------ (2)
Subtracting equation 2 and 1 and solving further,
312*144*x/1000000 = 112.32
X = Rs 2500.
Alternative way: Using formula for Difference
between CI and SI for 3 years

we can also use the above formula to find the value of P.

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Q:

You deposit $600 into a 6 month certificate of deposit. After 6 months the balance is $618. Find the simple annual interest rate.

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

Explanation:

I=prt

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Q:

What will be the ratio of simple interest earned by certain amount at the same rate of interestfor 4 years and 6 years ?

A) 1:2 B) 2:1
C) 2:3 D) 3:2
 
Answer & Explanation Answer: C) 2:3

Explanation:

Let p be the principle amount

And R% be the rate of interest

Then, required ratio =P×4×R100P×6×R100 

 

⇒4PR6PR= 2:3

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Q:

Simple Interest received by a person in 10 years on a principal of Rs 9500 is 130% of the principal. What is the rate of interest (in %) per annum?

A) 12 B) 13
C) 15 D) 19
 
Answer & Explanation Answer: B) 13

Explanation:
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Q:

A person divided a sum of Rs. 17,200 into three parts and invested at 5%. 6% and 9% per annum simple interest. At the end of two years, he got the same interest on each part of money. What is the money invested at 9%?

 

A) Rs. 3,200 B) Rs. 4,000
C) Rs. 4,800 D) Rs. 5000
 
Answer & Explanation Answer: B) Rs. 4,000

Explanation:
Let sum invested @ 5% be P1, @ 6% be P2 then @ 9% =17200-(P1+P2)
So according to question
P1*5*2/100 = P2*6*2/100 or P1 = (6/5) P2
Also P2*6*2/100 = [17200-(P1+P2)]*9*2/100
Or 2 P2 = [17200–(11/5)P2] * 3
Or (2 + 33/5)P2 = 17200 * 3
P2 = 17200 * 3 * 5 / 43 = 6000
So P1 = 6/5 P2 = 7200
So Sum invested @ 9% = 17200–(6000+7200) = Rs 4000
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Q:

A sum becomes Rs 2286 in 3 years and Rs 2448 in 4 years at simple interest. What is the rate (in percentage) of interest per annum?

A) 10 B) 9
C) 8 D) 11
 
Answer & Explanation Answer: B) 9

Explanation:
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