Compound Interest Quiz Set 010

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Question 1

The interest earned by an amount of Rs. 20000 @5% compounded annually is Rs. 2050. What is the period in years?

 A

2 years.

 B

3 years.

 C

1 year.

 D

1/2 year.

Soln.
Ans: a

The amount is 20000 + 2050. So 22050 = 20000 × $(105/100)^n$. So $22050/20000$ = $(105/100)^n$, which can be put in the form $(105/100)^2$ = $(105/100)^n$, so n = 2 years.


Question 2

The amount of Rs. 8000000 earns an interest of Rs. 741816 @3% compounded annually. What is the investment period in years?

 A

3 years.

 B

2 years.

 C

1 year.

 D

1/2 year.

Soln.
Ans: a

The amount is 8000000 + 741816. So 8741816 = 8000000 × $(103/100)^n$. So $8741816/8000000$ = $(103/100)^n$, which can be put in the form $(103/100)^3$ = $(103/100)^3$, so n = 3 years.


Question 3

What is the difference between the simple interest and compound interest at the rate of 12% for 1 year? The compounding is half-yearly, and the principal is Rs. 60000.

 A

Rs. 216.

 B

Rs. 316.

 C

Rs. 116.

 D

Rs. 416.

Soln.
Ans: a

The simple interest SI = (P × r)/100 = (60000 × 12)/100 = Rs. 7200. Compound interest will have half interest rate and n = 2. By shortcut formula, we have CI = ${P × R × (R + 200)}/10000$ = ${60000 × 6 × (6 + 200)}/10000$ = Rs. 7416. The difference = Rs. 216.


Question 4

A bank offers an interest rate of 6% compounded annually. Initially I deposit Rs. 90000 in the bank under this scheme. After 1 year I again deposit Rs 90000. What is the total amount that I will get after 2 years?

 A

Rs. 196524.

 B

Rs. 196624.

 C

Rs. 196424.

 D

Rs. 196724.

Soln.
Ans: a

Let P, A, r and n have their usual meanings. For the first deposit n = 2, and for the second deposit n = 1. So total amount is P × $((1 + r/100)^2 + (1 + r/100))$ = $P/10000$ × $((100 + r)^2 + 100(100 + r))$ = $P/10000 × (100 + r)$ × $(100 + r + 100)$ which equals ${P × (100 + r) × (200 + r)}/10000.$ Putting r = 6 and P = 90000 and cancelling 10000, we get 9 × 106 × 206 = Rs. 196524.


Question 5

An amount P is invested for 2 years @6% p.a. The simple interest is Rs. 7000. What would be the compound interest on the same amount, at the same rate and for the same time, compounded annually?

 A

Rs. 7210.

 B

Rs. 7310.

 C

Rs. 7110.

 D

Rs. 7410.

Soln.
Ans: a

Let SI, P, r, t have usual meanings. Then, for 2 years, SI = (P × r × 2)/100. So P = $(50 × SI)/r$. The compound interest for 2 years by shortcut formula is ${P × r × (200 + r)}/10000$. Putting P here, it becomes, ${{(50 × SI)/r} × r × (200 + r)}/10000$ = ${SI × (r + 200)}/200$ = ${7000 × (6 + 200)}/200$ = Rs. 7210.


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This Blog Post/Article "Compound Interest Quiz Set 010" by Parveen (Hoven) is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
Updated on 2017-05-17.

Posted by Parveen(Hoven),
Aptitude Trainer


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