Compound Interest Questions

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 rs.30000 at 7% per annum is Rs.4347. The period is

A) 2 years B) 2.5 years
C) 3 years D) 4 years
 
Answer & Explanation Answer: A) 2 years

Explanation:

Amount = Rs.(30000+4347) = Rs.34347

 

let the time be n years

 

Then,30000(1+7/100)^n = 34347

 

(107/100)^n = 34347/30000 = 11449/10000 = (107/100)^2

 

n = 2years

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375 94726
Q:

Find compound interest on Rs. 8000 at 15% per annum for 2 years 4 months, compounded annually

A) 2109 B) 3109
C) 4109 D) 6109
 
Answer & Explanation Answer: B) 3109

Explanation:

Time = 2 years 4 months = 2(4/12) years = 2(1/3) years.
Amount = Rs'. [8000 X (1+(15/100))^2 X (1+((1/3)*15)/100)]
=Rs. [8000 * (23/20) * (23/20) * (21/20)]
= Rs. 11109. .
:. C.I. = Rs. (11109 - 8000) = Rs. 3109.

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337 57558
Q:

A sum of money lent at compound interest for 2 years at 20% per annum would fetch Rs.482 more, if the interest was payable half yearly than if it was payable annually . The sum is

A) 10000 B) 20000
C) 40000 D) 50000
 
Answer & Explanation Answer: B) 20000

Explanation:

Let sum=Rs.x

 

C.I. when compounded half yearly = x1+101004-x=464110000

 

C.I. when compounded annually =x201002-x=1125

 464110000x-1125x=482

 

=> x=20000

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271 56098
Q:

A sum of money amounts to Rs.6690 after 3 years and to Rs.10,035 after 6 years on compound interest.find the sum.

A) 4360 B) 4460
C) 4560 D) 4660
 
Answer & Explanation Answer: B) 4460

Explanation:

Let the sum be Rs.P.then
P(1+R/100)^3=6690…(i) and P(1+R/100)^6=10035…(ii)
On dividing,we get (1+R/100)^3=10025/6690=3/2.
Substituting this value in (i),we get:
P*(3/2)=6690 or P=(6690*2/3)=4460
Hence,the sum is rs.4460.

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246 70689
Q:

Find the compound interest on Rs. 10,000 in 2 years at 4% per annum, the interest being compounded half-yearly.

A) 524.32 B) 624.32
C) 724.32 D) 824.32
 
Answer & Explanation Answer: D) 824.32

Explanation:

Principal = Rs. 10000; Rate = 2% per half-year; Time = 2 years = 4 half-years.
Amount == Rs. 10824.32.

 

 Rs.10000*1+21004=Rs.10000*5150*5150*5150*5150

 

 C.I. = Rs. (10824.32 - 10000) = Rs. 824.32.

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137 51103
Q:

The difference between compound interest and simple interest on a sum for two years at 8% per annum, where the interest is compounded annually is Rs.16. if the interest were compounded half yearly , the difference in two interests would be nearly

A) Rs.24.64 B) Rs.21.85
C) Rs.16 D) Rs.16.80
 
Answer & Explanation Answer: A) Rs.24.64

Explanation:

For 1st year S.I =C.I.

 

Thus, Rs.16 is the S.I. on S.I. for 1 year, which at 8% is thus Rs.200

 

i.e S.I on the principal for 1 year is Rs.200

 

Principle = Rs.100*2008*1 = Rs.2500

 

Amount for 2 years, compounded half-yearly

 Rs.2500*1+41004=Rs.2924.4

 

C.I = Rs.424.64

 

Also, S.I=Rs.2500*8*2100=Rs.400

 

Hence, [(C.I) - (S.I)] = Rs. (424.64 - 400) = Rs.24.64

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121 42706
Q:

Reena took a loan of Rs. 1200 with simple interest for as many years as the rate of interest. If she paid Rs. 432 as interest at the end of the loan period, what was the rate of interest?

A) 3.6 B) 6
C) 18 D) Cannot be determined
 
Answer & Explanation Answer: B) 6

Explanation:

Explanation:

 

Let rate = R% and time = R years.

 

Then, 1200*R*R100=432

 

12R2=432

 

=>R2=36R=6

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105 48740
Q:

If the simple interest on a sum of money at 5% per annum for 3 years is Rs. 1200, find the compound interest on the same sum for the same period at the same rate.

A) 1261 B) 1271
C) 1281 D) 1291
 
Answer & Explanation Answer: A) 1261

Explanation:

Clearly, Rate = 5% p.a., Time = 3 years, S.I.= Rs. 1200. . .
So principal=RS [100*1200]/3*5=RS 8000
Amount = Rs. 8000 x [1 +5/100]^3 - = Rs. 9261.
.. C.I. = Rs. (9261 - 8000) = Rs. 1261.

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