Compound Interest Quiz Set 002

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Question 1

An amount P is invested for 2 years @6% p.a. The simple interest is Rs. 7000. What would be the compound interest on the same amount, at the same rate and for the same time, compounded annually?

 A

Rs. 7210.

 B

Rs. 7310.

 C

Rs. 7110.

 D

Rs. 7410.

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, ${{(50 × SI)/r} × r × (200 + r)}/10000$ = ${SI × (r + 200)}/200$ = ${7000 × (6 + 200)}/200$ = Rs. 7210.


Question 2

An interest rate of 18% compounded half-annually is offered by a bank. An account holder deposits Rs. 60000 in the bank under this scheme. After six months he again deposits Rs 60000. What is the total amount that he will get after 1 year?

 A

Rs. 136686.

 B

Rs. 154444.

 C

Rs. 154244.

 D

Rs. 154544.

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 = 9 and P = 60000 and cancelling 10000, we get 6 × 109 × 209 = Rs. 136686. Please note that the rate of interest will be 1/2 because the compounding is half yearly.


Question 3

A bank offers an interest rate of 9% compounded annually. Initially I deposit Rs. 20000 in the bank under this scheme. After 1 year I again deposit Rs 20000. What is the total amount that I will get after 2 years?

 A

Rs. 45562.

 B

Rs. 45662.

 C

Rs. 45462.

 D

Rs. 45762.

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 = 9 and P = 20000 and cancelling 10000, we get 2 × 109 × 209 = Rs. 45562.


Question 4

The amount of Rs. 2000000 earns an interest of Rs. 185454 @3% compounded annually. What is the investment period in years?

 A

3 years.

 B

2 years.

 C

1 year.

 D

1/2 year.

Soln.
Ans: a

The amount is 2000000 + 185454. So 2185454 = 2000000 × $(103/100)^n$. So $2185454/2000000$ = $(103/100)^n$, which can be put in the form $(103/100)^3$ = $(103/100)^3$, so n = 3 years.


Question 5

What is the amount receivable on Rs. 3000000 after 9 months, invested at a rate of 16% compounded quarterly?

 A

Rs. 3374592.

 B

Rs. 3374692.

 C

Rs. 3374492.

 D

Rs. 3374792.

Soln.
Ans: a

In this case r = $16/4$% and n = 3 because compounding is quarterly, and in 9 months there are three quarters. So A = 3000000 × $(1 + 4/100)^3$, which equals 3 × 104 × 104 × 104, i.e., Rs. 3374592.


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This Blog Post/Article "Compound Interest Quiz Set 002" by Parveen (Hoven) is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
Updated on 2017-06-24.

Posted by Parveen(Hoven),
Aptitude Trainer


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