Compound Interest Quiz Set 016

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Question 1

An amount P is invested for 2 years @6% p.a. The simple interest is Rs. 6000. What would be the compound interest on the same amount, at the same rate and for the same time, compounded annually?

 A

Rs. 6180.

 B

Rs. 6280.

 C

Rs. 6080.

 D

Rs. 6380.

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, ${{(50 × SI)/r} × r × (200 + r)}/10000$ = ${SI × (r + 200)}/200$ = ${6000 × (6 + 200)}/200$ = Rs. 6180.


Question 2

How much interest does an amount of Rs. 1000000 earn @4% compounded annually for 3 years?

 A

Rs. 124864.

 B

Rs. 124964.

 C

Rs. 124764.

 D

Rs. 125064.

Soln.
Ans: a

Amount A = 1000000 × $(1 + 4/100)^3$, which equals 1000000 × $104/100$ × $104/100$ × $104/100$ = 1 × 104 × 104 × 104 = Rs. 1124864. So interest = A - P = 1124864 - 1000000 = Rs. 124864.


Question 3

An interest rate of 4% compounded half-annually is offered by a bank. An account holder deposits Rs. 10000 in the bank under this scheme. After six months he again deposits Rs 10000. What is the total amount that he will get after 1 year?

 A

Rs. 20604.

 B

Rs. 21316.

 C

Rs. 21116.

 D

Rs. 21416.

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 = 2 and P = 10000 and cancelling 10000, we get 1 × 102 × 202 = Rs. 20604. Please note that the rate of interest will be 1/2 because the compounding is half yearly.


Question 4

The interest earned by an amount of Rs. 90000 @2% compounded annually is Rs. 3636. 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 90000 + 3636. So 93636 = 90000 × $(102/100)^n$. So $93636/90000$ = $(102/100)^n$, which can be put in the form $(102/100)^2$ = $(102/100)^n$, so n = 2 years.


Question 5

The compound amount after 3 years on a principal of Rs. x is same as that on a principal of Rs. (828 - x) after 4 years, then what is x if the rate of interest is 7% p.a. compounded yearly?

 A

Rs. 428.

 B

Rs. 528.

 C

Rs. 328.

 D

Rs. 628.

Soln.
Ans: a

We have x × $(1 + 7/100)^3$ = (828 - x) × $(1 + 7/100)^4$. Cancelling, we get x = (828 - x) × (1 + 7/100). Simplifying, x = ${828 × (100 + 7)}/(200 + 7)$, which gives x = Rs. 428.


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This Blog Post/Article "Compound Interest Quiz Set 016" 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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