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Home > Arithmetic Aptitude > Compound Interest > Questions and Answers

Exercise:

Exercise 1

► Exercise 2

01. Find the least number of complete years in which a sum of money put out at 25% CI will be more than double of itself?
A. 4 B. 5
C. 6 D. 4.5

Answer and Explanation

Answer: 4

Explanation:
Let the number of years be n
Let the sum be Rs x
x(1 + 25/400)3 = 2x,
n=3.10 years
The sum will double in 3.10 years
It will be more than double in 4 years

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02. A loan of Rs 2000 is to be paid back in 3 equal annual installments. How much is each installment, to the nearest whole rupee, if the interest is compounded annually at 12 ½ p.a.?
A. Rs. 480 B. Rs. 320
C. Rs 840 D. Rs. 230

Answer and Explanation

Answer: Rs 840

Explanation:
Amount to be paid after three years 200(1 + 25/200)3 = Rs 2847.66
Let the annual installment be Rs x
x(1+25/200)2 + x(1 + 25/100) + x = 2847.66
x= Rs 840

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03. A sum of Rs 1230 is borrowed at 5% CI interest for 2 years on the condition that it is refunded in 2 equal installments one at the end of the first year and the other at the end of second. Find the amount of each installment
A. 651 B. 661.50
C. 600 D. 200

Answer and Explanation

Answer: 661.50

Explanation:
Let the installments be Rs x each
Amount to be refunded = 1230 (1 + 5/100)2 = 1356.075
x(1 + 5/100) + x = 1356.075
x = 661.50

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04. A sum of money is put out at CI for 2 years at 20% interest compounded yearly. It would fetch Rs 48.20 more if the interest were payable half yearly. Find the sum
A. 2000 B. 3000
C. 2500 D. 4000

Answer and Explanation

Answer: 2000

Explanation:
Let the sum be Rs x
Amount paid if interest payable yearly = x(1 + 20/100)2 = x(120/100)2
Amount paid if interest payable half yearly = x(1 + 10/100)4 = x(110/100)4
x(110/100)4 - x(120/100)2 = 48.20 =>x = Rs 2000

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05. The CI and simple interest on certain sum for 2 years are respectively Rs 41 and Rs 40. Find the sum and rate per cent
A. Rs 400, 5% B. Rs 300, 10%
C. Rs 350, 11% D. Rs 400, 2%

Answer and Explanation

Answer: Rs 400, 5%

Explanation:
Let the sum be Rs P,
Rate of interest be r%
∴annual SI = Rs 40/2 = Rs 20
∴20 * 1 * r/100 =1=>r=5%
∴P * 1 * 5/100 = 20 =>P=Rs 400

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06. A sum of money, compound interest compounded annually, amounts in 2 years to Rs 605 and in 3 years to Rs 665.5. Find the rate of interest and the original sum
A. 10% , 500 B. 9%, 1000
C. 8%, 800 D. 7%, 500

Answer and Explanation

Answer: 10% , 500

Explanation:
Let the sum be Rs x
Rate of interest be r%
x (1 + r/100)2 = 605……………..A
x (1 + r/100)3 = 665.5……………B
Dividing B by A,
r = 10%, x = Rs 500

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07. The CI on Rs 800 in 2 Years becomes Rs 82. Find the rate of compound interest
A. 2% B. 5%
C. 5.5% D. 3%

Answer and Explanation

Answer: 5%

Explanation:
Let the rate be r% pa
800(1 + r/100)2 – 800 = 82
r = 5%

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08. Find the compound interest and the amount on Rs 8000 at 5% pa. for 3 years when interest is reckoned yearly
A. Rs 1261, Rs 9261 B. Rs 1621, Rs 9621
C. Rs 1200, Rs 1800 D. Rs 925, Rs 1025

Answer and Explanation

Answer: Rs 1261, Rs 9261

Explanation:
Amount = 8000 (1 + 5/100)3 = Rs 9261
Interest = Rs ( 9261 - 8000) = Rs 1261

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09. The population of a town increases 5% annually but decrease by emigration by ¼%. What is the net increase in 3 years?
A. 14.93% B. 19.43%
C. 10.93% D. 12.53%

Answer and Explanation

Answer: 14.93%

Explanation:
Let the original population be 100
Net annual increase = (5 – 1/4) = 19/4%
Therefore the population in 3 years = 100 * (1 + 19 /400)3 =100*(419/400)3=114.93
∴increase = 114.93 – 100 = 14.93%

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10. A sum of Rs 8000 is borrowed at 5% compound interest and paid bank in 3 equal installments. What is the value of each installment?
A. Rs 2937.67 B. Rs 2937.50
C. Rs 2637.67 D. Rs 2037.67

Answer and Explanation

Answer: Rs 2937.67

Explanation:
Let the value of each installment be Rs x
Amount to be returned after 3 years
= 8000(1 + 5/100)3 = 9261
∴x (21/20)2 + x(21/20) + x =9261
i.e. 1261x = 9261 * 400, so x= Rs 2937.67

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