Compound Interest problems
- 1. What will be compounded amount? I. Rs. 200 was borrowed for 192 months at 6% compounded annually. II. Rs. 200 was borrowed for 16 years at 6%.
Options- A. I alone sufficient while II alone not sufficient to answer
- B. II alone sufficient while I alone not sufficient to answer
- C. Either I or II alone sufficient to answer
- D. Both I and II are not sufficient to answer Also asked in: Bank Exams, Bank PO
Correct Answer: Either I or II alone sufficient to answer
Explanation:
I. Amount =
II. Amount =
Thus, I as well as II gives the answer.
- 2. Find the effective rate of interest for an investment that earns 5 1/2% per year, compounded continuously
Options- A. 5.65%
- B. 5.75%
- C. 5.85%
- D. 5.95% Also asked in: Bank Exams, Bank PO
Correct Answer: 5.65%
Explanation:
We are not given a value of P in this problem, so either pick a value
for P and stick with that throughout the problem, or just let P = P.
We have that t = 1, and r = .055. To find the effective rate of interest,
first find out how much money we have after one year:
A = Pert
A = Pe(.055)(1)
A = 1.056541P.
Therefore, after 1 year, whatever the principal was, we now have 1.056541P.
Next, find out how much interest was earned, I, by subtracting the initial amount of money from the final amount:
I = A ? P
= 1.056541P ? P
= .056541P.
Finally, to find the effective rate of interest, use the simple interest formula, I = Prt. So,
I = Pr(1) = .056541P
.056541 = r.
Therefore, the effective rate of interest is 5.65%
- 3. Josh borrowed $250 from his mother to buy an electric scooter. Josh will pay her back in 1 year with 3% simple annual interest. How much interest will Josh pay?
Options- A. 7.50
- B. 8.50
- C. 9.50
- D. 10.50 Also asked in: Bank Exams, Bank PO
Correct Answer: 7.50
Explanation:
I=prt/100
- 4. The effective annual rate of interest corresponding to nominal rate of 6% per annum payable half yearly is
Options- A. 5%
- B. 6%
- C. 7%
- D. 6.09% Also asked in: Bank Exams, Bank PO
Correct Answer: 6.09%
Explanation:
amount=[100(1+3/100)^2]=Rs.106.09
- 5. Find the time to double your investment at 6%
Options- A. 10years
- B. 11years
- C. 12years
- D. 13years Also asked in: Bank Exams, Bank PO
Correct Answer: 12years
Explanation:
M=p(1+i)^n
- 6. Mr. and Mrs. Espedido?s property taxes, amounting to $2450, are due on July 1.What amount should the city accept if the taxes are paid eight months in advance and the city can earn 6% compounded monthly on surplus funds?
Options- A. 2354.17
- B. 2354
- C. 2376
- D. 2389 Also asked in: Bank Exams, Bank PO
Correct Answer: 2354.17
Explanation:
i=j/m
PV= FV(1+ i)^-n
- 7. Two payments of $10,000 each must be made one year and four years from now. If money can earn 9% compounded monthly, what single payment two years from now would be equivalent to the two scheduled payments?
Options- A. 17296
- B. 13296
- C. 19296
- D. 15296 Also asked in: Bank Exams, Bank PO
Correct Answer: 19296
Explanation:
i=j/m
- 8. The population of a rural region is expected to fall by 2% per year for the next 10 years. If the region?s current population is 100,000, what is the expected population 10 years from now?
Options- A. 81707
- B. 91707
- C. 61707
- D. 71707 Also asked in: Bank Exams, Bank PO
Correct Answer: 81707
Explanation:
i=j/m
FV = PV(1 + i)^n
- 9. If Rs. 10000 amounts to Rs. 11664 invested in compound interest(compounded annually) for two years then the annual rate of compound interest is
Options- A. 10%
- B. 9%
- C. 8%
- D. 6% Also asked in: Bank Exams
Correct Answer: 8%
- 10. At what rate of compound interest per annum will a sum of Rs 50000 become Rs 73205 in 2 years?
Options- A. 21 percent
- B. 19 percent
- C. 17 percent
- D. 15 percent Also asked in: Bank Exams
Correct Answer: 21 percent
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