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Compound Interest Questions Answers

  • 1. Find the compound interest on Rs. 7500 at 4% per annum for 2 years, compounded annually.

    1. Rs. 610
    2. Rs. 612
    3. Rs. 614
    4. Rs. 616
    Answer And Explanation

    Answer: Option B

    Explanation:

    \begin{aligned}
    Amount = [7500 \times (1+ \frac{4}{100})^2] \\
    = (7500 \times \frac{26}{25} \times \frac{26}{25}) \\
    = 8112 \\

    \end{aligned}

    So compound interest = (8112 - 7500) = 612

  • 2. Albert invested amount of 8000 in a fixed deposit for 2 years at compound interest rate of 5 % per annum. How much Albert will get on the maturity of the fixed deposit.

    1. Rs. 8510
    2. Rs. 8620
    3. Rs. 8730
    4. Rs. 8820
    Answer And Explanation

    Answer: Option D

    Explanation:

    \begin{aligned}
    => (8000 \times(1+\frac{5}{100})^2) \\
    => 8000 \times \frac{21}{20}\times \frac{21}{20} \\
    => 8820
    \end{aligned}

  • 3. What will be the compound interest on Rs. 25000 after 3 years at the rate of 12 % per annum

    1. Rs 10123.20
    2. Rs 10123.30
    3. Rs 10123.40
    4. Rs 10123.50
    Answer And Explanation

    Answer: Option A

    Explanation:

    \begin{aligned}
    (25000 \times (1 + \frac{12}{100})^3) \\
    => 25000\times\frac{28}{25}\times\frac{28}{25}\times\frac{28}{25} \\
    => 35123.20 \\
    \end{aligned}

    So Compound interest will be 35123.20 - 25000
    = Rs 10123.20

  • 4. A man saves Rs 200 at the end of each year and lends the money at 5% compound interest. How much will it become at the end of 3 years.

    1. Rs 662
    2. Rs 662.01
    3. Rs 662.02
    4. Rs 662.03
    Answer And Explanation

    Answer: Option C

    Explanation:

    \begin{aligned}
    [200(1+\frac{5}{100})^3 + 200(1+\frac{5}{100})^2+ \\ 200(1+\frac{5}{100})]

    = [200(\frac{21}{20} \times \frac{21}{20} \times \frac{21}{20})\\
    + 200(\frac{21}{20}\times\frac{21}{20})+200(\frac{21}{20})] \\

    = 662.02
    \end{aligned}

  • 5. Find compound interest on Rs. 7500 at 4% per annum for 2 years, compounded annually

    1. Rs 312
    2. Rs 412
    3. Rs 512
    4. Rs 612
    Answer And Explanation

    Answer: Option D

    Explanation:

    Please apply the formula

    \begin{aligned}
    Amount = P(1+\frac{R}{100})^n \\
    \text{C.I. = Amount - P}
    \end{aligned}

  • 6. Find the compound interest on Rs.16,000 at 20% per annum for 9 months, compounded quarterly

    1. Rs 2520
    2. Rs 2521
    3. Rs 2522
    4. Rs 2523
    Answer And Explanation

    Answer: Option C

    Explanation:

    Please remember, when we have to calculate C.I. quarterly then we apply following formula if n is the number of years

    \begin{aligned}
    Amount = P(1+\frac{\frac{R}{4}}{100})^{4n}
    \end{aligned}

    Principal = Rs.16,000;
    Time=9 months = 3 quarters;
    Rate = 20%, it will be 20/4 = 5%

    So lets solve this question now,

    \begin{aligned}
    Amount = 16000(1+\frac{5}{100})^3 \\
    = 18522\\
    C.I = 18522 - 16000 = 2522
    \end{aligned}

  • 7. The present worth of Rs.169 due in 2 years at 4% per annum compound interest is

    1. Rs 155.25
    2. Rs 156.25
    3. Rs 157.25
    4. Rs 158.25
    Answer And Explanation

    Answer: Option B

    Explanation:

    In this type of question we apply formula
    \begin{aligned}
    Amount = \frac{P}{(1+\frac{R}{100})^n} \\
    Amount = \frac{169}{(1+\frac{4}{100})^2} \\
    Amount = \frac{169 * 25 * 25}{26*26} \\
    Amount = 156.25
    \end{aligned}