# Compound Interest Quiz Set 001

### Question 1

What is compound interest on Rs. 80000 after 2 years, invested at a rate of 6% compounded annually?

A

Rs. 9888.

B

Rs. 9988.

C

Rs. 9788.

D

Rs. 10088.

Soln.
Ans: a

The shortcut formula is CI = Pr(r + 200)/10000. Putting P = 80000, r = 6, we get \${80000 × 6 × (6 + 200)}/10000\$ = Rs. 9888.

### Question 2

The compound amount after 2 years on a principal of Rs. P is same as that on a principal of Rs. (1035 - P) after 3 years, then what is P if the rate of interest is 7% p.a. compounded yearly?

A

Rs. 535.

B

Rs. 635.

C

Rs. 435.

D

Rs. 735.

Soln.
Ans: a

We have P × \$(1 + 7/100)^2\$ = (1035 - P) × \$(1 + 7/100)^3\$. Cancelling, we get P = (1035 - P) × (1 + 7/100). Simplifying, P = \${1035 × (100 + 7)}/(200 + 7)\$, which gives P = Rs. 535.

### Question 3

When a certain amount is invested in a simple interest scheme, it increases by 30% in 3 years. What will be compound interest after 3 years on an amount of Rs. 8000, at the same interest rate, and annual compounding?

A

Rs. 2648.

B

Rs. 2748.

C

Rs. 2548.

D

Rs. 2848.

Soln.
Ans: a

Simple interest on Rs. 100 in 3 years is Rs. 30, so rate is 30/3 = 10%. Compound interest for 3 years would be 8000 × \$(1 + 10/100)^3\$ = 8000 × \$(11/10)^3\$ = \$(8000 × 11 × 11 × 11)/1000\$ = Rs. 10648. Interest = A - P = 10648 - 8000 = Rs. 2648.

### Question 4

What is the difference between the simple interest and compound interest at the rate of 8% for 1 year? The compounding is half-yearly, and the principal is Rs. 30000.

A

Rs. 48.

B

Rs. 148.

C

Rs. 98.

D

Rs. 248.

Soln.
Ans: a

The simple interest SI = (P × r)/100 = (30000 × 8)/100 = Rs. 2400. Compound interest will have half interest rate and n = 2. By shortcut formula, we have CI = \${P × R × (R + 200)}/10000\$ = \${30000 × 4 × (4 + 200)}/10000\$ = Rs. 2448. The difference = Rs. 48.

### Question 5

What is the difference between the simple interest and compound interest at the rate of 8% for 1 year? The compounding is half-yearly, and the principal is Rs. 70000.

A

Rs. 112.

B

Rs. 212.

C

Rs. 162.

D

Rs. 312.

Soln.
Ans: a

The simple interest SI = (P × r)/100 = (70000 × 8)/100 = Rs. 5600. Compound interest will have half interest rate and n = 2. By shortcut formula, we have CI = \${P × R × (R + 200)}/10000\$ = \${70000 × 4 × (4 + 200)}/10000\$ = Rs. 5712. The difference = Rs. 112. 