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Compound Interest

Compound Interest - Important Points


1.

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

A. Rs. 420.20

B. Rs. 319.06

C. Rs. 306.04

D. Rs. 294.75

Discuss Work Space

Answer: option c

Explanation:

A = 5000(51/50)^3 = 5306.04= 5000 = 306.04


2.

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

Discuss Work Space

Answer: option b

Explanation:

Time = 2 years 4 months = 2(4/12) years = 2(1/3) years.
Amount = [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


3.

In what time will Rs. 1000 become Rs. 1331 at 10% per annum compounded annually?

A. 1 year

B. 4 years

C. 3 years

D. 6 years

Discuss Work Space

Answer: option c

Explanation:

Principal = Rs. 1000; Amount = Rs. 1331; Rate = 10% p.a.

Let the time be n years.
Then, [ 1000 (1+ (10/100))^n ] = 1331 or (11/10)^n = (1331/1000)

= (11/10)^3
=> n = 3 years.


4.

The Simple interest on a certain sum for 2 years at 10% per annum is Rs. 90. The corresponding compound interest is:

A. Rs. 99

B. Rs. 94.50

C. Rs. 95.60

D. Rs. 108

Discuss Work Space

Answer: option b

Explanation:

Sum = Rs. 100 x 90/20 = Rs. 450
C.I. = Rs. 450 x (1+ 10/100)^2 - 450 = Rs. 94.50


5.

The difference between simple interest and compound interest on Rs. 600 for 1 years at 10% per annum, reckoned half yearly is?

A. Nil

B. Rs. 6.60

C. Rs. 4.40

D. Rs. 1.50

Discuss Work Space

Answer: option d

Explanation:

S.I. = Rs. (600 x 5 x 2)/100 = Rs.60
C.I.= Rs. [600 x (1 + 5/100)2 - 600] = Rs. 61.50
Requred Difference = Rs. (61.50 - 60) = Rs.1.50