Compound Interest - General Questions

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. 400
B.	Rs. 500
C.	Rs. 600
D.	Rs. 800

Answer: Option B

Explanation:

Let the sum be Rs. P.

Then,		P		1 +	10		2	- P		= 525
					100

	P			11		2	- 1		= 525
				10

P =		525 x 100		= 2500.
		21

Sum = Rs . 2500.

So, S.I. = Rs.		2500 x 5 x 4		= Rs. 500
		100

The difference between compound interest and simple interest on an amount of Rs. 15,000 for 2 years is Rs. 96. What is the rate of interest per annum?

A.	8
B.	10
C.	12
D.	Cannot be determined
E.	None of these

Answer: Option A

Explanation:

		15000 x		1 +	R		2	- 15000		-		15000 x R x 2		= 96
					100							100

15000			1 +	R		2	- 1 -	2R		= 96
				100				100

15000		(100 + R)² - 10000 - (200 x R)		= 96
		10000

R² =		96 x 2		= 64
		3

R = 8.

Rate = 8%.

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

A.	Rs. 2.50
B.	Rs. 3
C.	Rs. 3.75
D.	Rs. 4
E.	None of these

Answer: Option B

Explanation:

S.I. = Rs		1200 x 10 x 1		= Rs. 120.
		100

C.I. = Rs.		1200 x		1 +	5		2	- 1200		= Rs. 123.
					100

Difference = Rs. (123 - 120) = Rs. 3.

If the simple interest on a sum of money for 2 years at 5% per annum is Rs. 50, what is the compound interest on the same at the same rate and for the same time?

A.	Rs. 51.25
B.	Rs. 52
C.	Rs. 54.25
D.	Rs. 60

Answer: Option A

Explanation:

Sum = Rs.		50 x 100		= Rs. 500.
		2 x 5

Amount

= Rs.		500 x		1 +	5		2
					100

= Rs.		500 x	21	x	21
			20		20

= Rs. 551.25

C.I. = Rs. (551.25 - 500) = Rs. 51.25

Simple interest on a certain sum of money for 3 years at 8% per annum is half the compound interest on Rs. 4000 for 2 years at 10% per annum. The sum placed on simple interest is:

A.	Rs. 1550
B.	Rs. 1650
C.	Rs. 1750
D.	Rs. 2000

Answer: Option C

Explanation:

C.I.

= Rs.		4000 x		1 +	10		2	- 4000
					100

= Rs.		4000 x	11	x	11	- 4000
			10		10

= Rs. 840.

Sum = Rs.		420 x 100		= Rs. 1750.
		3 x 8

The effective annual rate of interest corresponding to a nominal rate of 6% per annum payable half-yearly is:

A.	6.06%
B.	6.07%
C.	6.08%
D.	6.09%

Answer: Option D

Explanation:

Amount of Rs. 100 for 1 year when compounded half-yearly		= Rs.		100 x		1 +	3		2		= Rs. 106.09
							100

Effective rate = (106.09 - 100)% = 6.09%

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. 8600
B.	Rs. 8620
C.	Rs. 8820
D.	None of these

Answer: Option C

Explanation:

Amount

= Rs.		8000 x		1 +	5		2
					100

= Rs.		8000 x	21	x	21
			20		20

= Rs. 8820.

The least number of complete years in which a sum of money put out at 20% compound interest will be more than doubled is:

A.	3
B.	4
C.	5
D.	6

Answer: Option B

Explanation:

P		1 +	20		n	> 2P			6		n	> 2.
			100						5

Now,		6	x	6	x	6	x	6		> 2.
		5		5		5		5

So, n = 4 years.

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