Compound Interest problems
- 1. $10,000 face value strip bond has 15 years remaining until maturity. If the prevailing market rate of return is 6.5% compounded semiannually, what is the fair market value of the strip bond?
Options- A. 1710.29
- B. 2710.29
- C. 3710.29
- D. 4710.29 Also asked in: Bank Exams, Bank PO
Correct Answer: 3710.29
Explanation:
i=j/m
n =m(Term) = 2(15.5) =31
Fair market value Present value of the face value
=FV(1+ i)^-n
- 2. A five-year promissory note with a face value of $3500, bearing interest at 11% compounded semiannually, was sold 21 months after its issue date to yield the buyer 10% compounded quarterly.What amount was paid for the note
Options- A. 4336.93
- B. 5336
- C. 6336
- D. 7336 Also asked in: Bank Exams, Bank PO
Correct Answer: 4336.93
Explanation:
i=j/m
Maturity value = PV(1 + i)^n
Term = 5 years - 21 months= 3.25 years
Price paid = FV(1+ i )^-n
- 3. There is 50% increase in an amount in 5 years at simple interest. What will be the compound interest of Rs. 12,000 after 3 years at the same rate ?
Options- A. Rs. 5422
- B. Rs. 5489
- C. Rs. 3972
- D. Rs. 6145 Also asked in: GRE, GATE, CAT, Bank Exams, AIEEE, Bank PO, Bank Clerk
Correct Answer: Rs. 3972
Explanation:
Let p = Rs. 100.
Then, S.I is Rs. 50 and time = 5 years.
= 10% p.a.
Now, p = Rs. 12,000 , T = 3 years and R = 10% p.a.
C.I. = Rs.
= Rs. 3972
- 4. Compound interest earned on a sum for the second and the third years are Rs.1200 and Rs.1440 respectively. Find the rate of interest ?
Options- A. 20% p.a
- B. 15% p.a
- C. 18% p.a
- D. 24% p.a Also asked in: AIEEE, Bank Exams, CAT, GATE, Bank Clerk, Bank PO
Correct Answer: 20% p.a
Explanation:
Rs.1440 - 1200 = Rs.240 is the interest on Rs.1200 for one year.
Rate of interest = (100 x 240) / (1200) = 20% p.a
- 5. The difference between simple and compound interests compounded annually on a certain sum of money for 2 years at 12% per annum is Rs 900. What is the value of given sum (in Rs)?
Options- A. 125000
- B. 250000
- C. 62500
- D. 187500 Discuss
Correct Answer: 62500
- 6. At what rate of compound interest per annum will a sum of Rs 20000 become Rs 23328 in 2 years?
Options- A. 8 percent
- B. 16 percent
- C. 24 percent
- D. 12 percent Also asked in: Bank Exams
Correct Answer: 8 percent
- 7. On a certain principal if the simple interest for two years is Rs 1400 and compound interest for the two years is Rs 1449, what is the rate of Interest?
Options- A. 7 percent
- B. 3.5 percent
- C. 14 percent
- D. 10 percent Also asked in: Bank Exams
Correct Answer: 7 percent
- 8. If the difference between the compound interest and the simple interest on a certain sum at the rate of 5% per annum for 2 years is Rs. 20, then the sum is
Options- A. Rs. 2000
- B. Rs. 4000
- C. Rs. 6000
- D. Rs. 8000 Also asked in: Bank Exams, CAT
Correct Answer: Rs. 8000
- 9. Find compound interest on Rs. 7500 at 4% per annum for 2 years, compounded annually
Options- A. Rs.512
- B. Rs.515
- C. Rs.612
- D. Rs.522 Also asked in: Bank Exams, Bank PO
Correct Answer: Rs.612
Explanation:
Amount
= Rs[7500x(1+4/100)²]
=Rs.(7500 * 26/25 * 26/25)
=Rs.8112
C.I
= Rs(8112 - 7500)
=Rs.612
- 10. Simple interest on a certain sum of money for 3 years at 8% per annum is half the compound interest on Rs. 4000 for 2 years at 10% per annum. The sum placed on simple interest is
Options- A. Rs.1650
- B. Rs.1550
- C. Rs.1750
- D. Rs.1850 Also asked in: Bank Exams, Bank PO
Correct Answer: Rs.1750
Explanation:
C.I. =Rs[4000x(1+10/100)²-4000]
Rs.(4000x11/10x11/10-4000) = Rs.940.
Sum
=Rs. [420 *100 /3 * 8]
= Rs.1750.
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