Compound Interest Quiz Set 007

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Question 1

What is compound interest on Rs. 60000 after 2 years, invested at a rate of 7% compounded annually?

 A

Rs. 8694.

 B

Rs. 8794.

 C

Rs. 8594.

 D

Rs. 8894.

Soln.
Ans: a

The shortcut formula is CI = Pr(r + 200)/10000. Putting P = 60000, r = 7, we get ${60000 × 7 × (7 + 200)}/10000$ = Rs. 8694.


Question 2

Rs. 1242 is divided into parts such that the compound amount on first part after 2 years is same as that for the other part after 3 years. What is the first part if the rate of interest in both the cases is 7%?

 A

Rs. 642.

 B

Rs. 742.

 C

Rs. 542.

 D

Rs. 842.

Soln.
Ans: a

Let the parts P and (1242 - P). We have P × $(1 + 7/100)^2$ = (1242 - P) × $(1 + 7/100)^3$. Cancelling, we get P = (1242 - P) × (1 + 7/100). Simplifying, P = ${1242 × (100 + 7)}/(200 + 7)$, which gives P = Rs. 642.


Question 3

What is compound interest on Rs. 50000 after 2 years, invested at a rate of 5% compounded annually?

 A

Rs. 5125.

 B

Rs. 5225.

 C

Rs. 5025.

 D

Rs. 5325.

Soln.
Ans: a

The shortcut formula is CI = Pr(r + 200)/10000. Putting P = 50000, r = 5, we get ${50000 × 5 × (5 + 200)}/10000$ = Rs. 5125.


Question 4

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 5

What is the amount receivable on Rs. 5000000 after 9 months, invested at a rate of 16% compounded quarterly?

 A

Rs. 5624320.

 B

Rs. 5624420.

 C

Rs. 5624220.

 D

Rs. 5624520.

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 = 5000000 × $(1 + 4/100)^3$, which equals 5 × 104 × 104 × 104, i.e., Rs. 5624320.


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This Blog Post/Article "Compound Interest Quiz Set 007" by Parveen (Hoven) is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
Updated on 2019-08-18.

Posted by Parveen(Hoven),
Aptitude Trainer


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