## Simple and Compound Interest

• Principal: The money borrowed or lent out for a certain period is called the principal or the sum.
• Interest: Extra money paid for using other’s money is called interest.
• Simple Interest (SI): If the interest on a sum borrowed for a certain period is reckoned uniformly, then it is called simple interest.
• Compound Interest: Interest added to the principal of a loan or deposit, so that the added interest also earns interest. This process is called compounding.

### Important Formulas & Equations

If P = Principal, A = Amount, R = Rate percent per year, T = T years, S.I = Simple interest, C.I = Compound interest, Then,

Simple Interest

• S.I = (P × R × T)/100
• A = P + S.I Compound Interest

• When interest is compounded yearly, • When interest is compounded half-yearly, • When interest is compounded quarterly, • When time is in a fraction of a year, say 2⅕ • If the rate of interest in 1st year, 2nd year …………..… nth year is R1%, R2% …………. Rn% respectively, then, ### Simple Interest and Compound Interest Aptitude Questions

1.Mr. Thomas spent Rs. 13,900 divided into two separate schemes A and B at a simple rate of interest of 14 percent p.a. And p.a. 11 percent Accordingly. If Rs. 3508 is the sum of simple interest received in 2 years, what was the amount invested in Scheme B?

• A. Rs. 6400
• B. Rs. 6500
• C. Rs. 7200
• D. Rs. 7500

2. How long will it take to yield Rs. 81 as interest at 4.5 percent per annum of simple interest for an amount of Rs. 450?

• A. 3.5 years
• B. 4 years
• C. 4.5 years
• D. 5 years

3. A sum of Rs 12,500 at the rate of simple interest amounts to Rs 15,500 in 4 years. What is the interest rate?

• A. 3%
• B. 4%
• C. 5%
• D. 6%

4. A man took a loan at a rate of 12 percent p.a. from a bank. Simple interest. He was only expected to pay Rs. 5400 interest for the duration after three years. The principal sum which he borrowed was

• A. Rs. 2000
• B. Rs. 10,000
• C. Rs. 15,000
• D. Rs. 20,000

5. What is the ratio of simple interest earned for six years by a certain amount at the same interest rate, and that for nine years?

• A. 1 : 3
• B. 1: 4
• C. 2 : 3

6. After seven years, a certain amount earns simple interest on Rs. 1750. Had the interest been 2 percent higher, how much more interest would it have earned?

• A. Rs. 35
• B. Rs. 245
• C. Rs. 350
• D. Cannot be determined

Answer: Option D (Cannot be determined)

7. Find out the C.I on Rs.5000 at 4% p.a. Compound half-yearly for 1 1/2 years.

• A. Rs.420.20
• B. Rs.319.06
• C. Rs.306.04
• D. Rs.294.75

8. In a certain time, Rs.8000 becomes Rs.9261 at a rate of 5 percent per annum of C.I. Finding time?

• A. 4 years
• B. 6 years
• C. 2 years
• D. 3 years

9. The difference between simple and compound returns, compounded annually at 4 percent per annum on a certain amount of money for two years, is Re. 1. The number (in Rs.) will be:

• A. 625
• B. 630
• C. 640
• D. 650

10. A basic value, there is a rise of 60 percent in a sum in 6 years. What is Rs.12,000 compound interest going to be at the same rate after three years?

• A. Rs. 2160
• B. Rs. 3120
• C. Rs. 3972
• D. Rs. 6240

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