Question 1

loan of $15 000 is taken out. If the interest rate on the loan is 7%, how much interest is due and what is the amount repaid if the loan was taken out on April 7 and is due in seven months

Accepted Answer

I = prt = [15000 × 0.07 × (214/365) ]=615.52 Future value, S = P + I = $15 000 + $615.52 = $15 615.52

Question 2

How long will it take $3000 to earn $60 interest at 6%?

Accepted Answer

t=I/pr

Question 3

A merchant receives an invoice for a motor boat for $20 000 with terms 4/30, n/100. What is the highest simple interest rate at which he can afford to borrow money in order to take advantage of the discount?

Accepted Answer

Suppose the merchant will take advantage of the cash discount of 4% of $20 000 = $800 by paying the bill within 30 days from the date of invoice. He needs to borrow $20 000 = $800 = $19 200. He would borrow this money on day 30 and repay it on day 100 (the day the original invoice is due) resulting in a 70-day loan. The interest he should be willing to pay on borrowed money should not exceed the cash discount $800. r=I/pt=21.73% The highest simple interest rate at which the merchant can afford to borrow money is 21.73%. This is a break-even rate. If he can borrow money, say at a rate of 15%, he should do so. He would borrow $19 200 for 70 days at 15%. Maturity value of the loan is $19 200(1+0.15(70/365))=$19 752.33 savings would be $20 000 − $19 752.33 = $247.67

Question 4

Find the principal which yields $25,000 when invested at 3% annually for 20 years.

Accepted Answer

P = F 1 + i n

Question 5

Question : What is the sum which earned interest ? Statements : a. The total simple interest was Rs. 9000 after 9 years. b. The total of sum and simple interest was double of the sum after 6 years.

Accepted Answer

Let the sum be Rs. x a. gives, S.I = Rs. 9000 and time = 9 years. b. gives, Sum + S.I for 6 years = 2 x Sum --> Sum = S.I for 6 years. Now, S.I for 9 years = Rs. 9000 S.I for 1 year = Rs. 9000/9 = Rs. 1000. S.I for 6 years = Rs. (1000 x 6)= Rs. 6000. --> x = Rs. 6000 Thus, both a and b are necessary to answer the question.

Question 6

An amount doubles itself in 15 years. what is the rate of interest ?

Accepted Answer

Let the principle be Rs. P As the amount double itself the interest is Rs. P too So P = P x r x 15/100 => r = 100/15 = 20/3 % = 6.66 %.

Question 7

Althaf borrows Rs. 1500 from two moneylenders. He pays interest at the rate of 12% per annum for one loan and at the rate of 14% per annum for the other. The total interest he pays for the entire year is Rs. 186. How much does he borrow at the rate …

Accepted Answer

Let Althaf lent Rs. A at 14% per year. Hence, Money lent at 12% = (1500-A); Given, total interest = Rs. 186. {(A x 14x 1)/100} + {[(1500-A) x 12 x 1/100]} = 186; 14A/100 + (18000 -12A)/100 = 186; 14A + 18000 - 12A = 186x100; 2A = 18600-18000; A = 600/2 = Rs. 300. Hence, money lent at 12% = 1500-300 = Rs. 1200.

Question 8

A man lent a sum of money at the rate of simple interest of 4%. If the interest for 8 years is Rs 340 less than the principal, the principal is

Accepted Answer

Rate = 4% Time = 8 years Simple Interest = PTR/100 = 32P/100 Given, P –32P/100 = 34068 P = 34000 P = 500

Question 9

A sum was invested for 3 years at simple interest at a certain rate. Had it been invested at 4% higher rate of interest, it would have fetched Rs 600 more. The sum is

Accepted Answer

Let the rate of interest be R (Interest at rate (R+4)%)–(Interest at R%) = 600(PT(R+4)/100) –(PTR/100) = 6003PR +12P –3PR = 60000 12P = 60000 P = 5000

Question 10

Each question contains Quantity I and Quantity II. Read the contents clearly and answer your questions accordingly. Quantity I: The Sl on a certain sum of money for 3 years at 5% per annum is Rs 4800. Then the principle is? Quantity II: The Cl on a …

Accepted Answer

Quantity I=15% of Principle=4800 Principle=Rs.32000 Quantity II=12.36% of Principle =3708 Principle=Rs.30000 Hence Quantity I > Quantity II

Question 11

The difference between the simple interest obtained by investing Rs. 'X' with 8% per annum for an year and by investing Rs. 'X+1400' with 8% per annum for two years is 240 Rs. Find the value of X.

Accepted Answer

[(X+1400)*8*2/100] - [(X*8*1)/100]= 240 0.16X + 14*16 - 0.08X = 240 0.08X = 240 - 224 0.08X = 16 X = Rs. 200

Simple Interest Questions