Simple and Compound Interest – Practice Questions, Shortcuts, Important Formulas

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

Answer: Option A (Rs. 6400)

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

Answer: Option B (4 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%

Answer: Option 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

Answer: Option C (Rs. 15,000)

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
  • D. Data inadequate

Answer: Option 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

Answer: Option C (Rs.306.04)

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

Answer: Option 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

Answer: Option A (625)

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

Answer: Option C (Rs. 3972)

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