Compound Interest problems
- 1. Rs.100 doubled in 5 years when compounded annually. How many more years will it take to get another Rs.200 compound interest
Options- A. 3years
- B. 5years
- C. 6years
- D. 7years Also asked in: Bank Exams, Bank PO
Correct Answer: 5years
Explanation:
Rs.100 invested in compound interest becomes Rs.200 in 5 years.
The amount will double again in another 5 years.
i.e., the amount will become Rs.400 in another 5 years.
So, to earn another Rs.200 interest, it will take another 5 years.
- 2. Albert invested an amount of Rs. 8000 in a fixed deposit scheme for 2 years at compound interest rate 5 p.c.p.a. How much amount will Albert get on maturity of the fixed deposit
Options- A. Rs.8820
- B. Rs.8620
- C. Rs.8520
- D. Rs.8320 Also asked in: Bank Exams, Bank PO
Correct Answer: Rs.8820
Explanation:
Amount = =Rs.8820
- 3. The effective annual rate of interest corresponding to a nominal rate of 6% per annum payable half-yearly is
Options- A. 6.06%
- B. 6.07%
- C. 6.08%
- D. 6.09% Also asked in: Bank Exams, Bank PO
Correct Answer: 6.09%
Explanation:
Amount of Rs. 100 for 1 year
when compounded half-yearly = Rs.[100*(1+3/100)^2]=Rs.106.09
Effective rate=(106.09-100)%=6.09%
- 4. Find the C.I. on Rs. 15,225 for 9 months at 16% per annum compounded quarterly ?
Options- A. Rs. 1911
- B. Rs. 1909
- C. Rs. 1901
- D. Rs. 1907 Also asked in: GATE, CAT, Bank Exams, AIEEE, Bank PO, Bank Clerk
Correct Answer: Rs. 1901
Explanation:
P = Rs. 15225, n = 9 months = 3 quarters, R = 16% p.a. per quarter.
Amount =
= (15225 x 26/25 x 26/25 x 26/25) = Rs. 17126.05
=> C.I. = 17126 - 15625 = Rs. 1901.05.
- 5. The compound interest on a certain sum for 2 years at 10% per annum is Rs. 525. The simple interest on the same sum for double the time at half the rate percent per annum is
Options- A. Rs.4000
- B. Rs.500
- C. Rs.600
- D. Rs.800 Also asked in: Bank Exams, Bank PO
Correct Answer: Rs.500
Explanation:
Let the sum be Rs. P.
Then,[p(1+10/100)2-p]=525
Sum =Rs.2500
S.I.= Rs.(2500*5*4)/100
= Rs. 500
- 6. If you deposit $4000 into an account paying 6% annual interest compounded quarterly, how much money will be in the account after 5 years ?
Options- A. 3387.42
- B. 4387.42
- C. 5387.42
- D. 6387.42 Also asked in: Bank Exams, Bank PO
Correct Answer: 5387.42
Explanation:
The mathematical formula for calculating compound interest depends on several factors. These factors include the amount of money deposited called the principal, the annual interest rate (in decimal form), the number of times the money is compounded per year, and the number of years the money is left in the bank.
FV = Future value of the Deposit
p = Principal or Amount of Money deposited
r = Annual Interest Rate (in decimal form )
n = No of times compounded per year
t = time in years
= 5387.42
- 7. Shawn invested one half of his savings in a bond that paid simple interest for 2 years and received Rs.550 as interest. He invested the remaining in a bond that paid compound interest, interest being compounded annually, for the same 2 years at the same rate of interest and received Rs.605 as interest. What was the value of his total savings before investing in thesetwo bonds?
Options- A. Rs.2543
- B. Rs.2534
- C. Rs.2546
- D. Rs.2750 Also asked in: Bank Exams, Bank PO
Correct Answer: Rs.2750
Explanation:
Shawn received an extra amount of (Rs.605 ? Rs.550) Rs.55 on his compound interest paying bond as the interest that he received in the first year also earned interest in the second year.
The extra interest earned on the compound interest bond = Rs.55
The interest for the first year =550/2 = Rs.275
Therefore, the rate of interest = = 20% p.a.
20% interest means that Shawn received 20% of the amount he invested in the bonds as interest.
If 20% of his investment in one of the bonds = Rs.275, then his total investment in each of the bonds = = 1375.
As he invested equal sums in both the bonds, his total savings before investing = 2 x 1375 =Rs.2750.
- 8. What will Rs.1500 amount to in three years if it is invested in 20% p.a. compound interest, interest being compounded annually?
Options- A. Rs.2592
- B. Rs.2492
- C. Rs.2352
- D. Rs.2352 Also asked in: Bank Exams, Bank PO
Correct Answer: Rs.2592
Explanation:
The usual way to find the compound interest is given by the formula A = .p(1+r/100)^n
In this formula,
A is the amount at the end of the period of investment
P is the principal that is invested
r is the rate of interest in % p.a
And n is the number of years for which the principal has been invested.
In this case, it would turn out to be A =1500(1+20/100)^3
= 2592.
- 9. Mr. Gupta borrowed a sum of money on compound interest. What will be the amount to be repaid if he is repaying the entire amount at the end of 2 years? I. The rate of interest is 5 p.c.p.a. II. Simple interest fetched on the same amount in one year is Rs. 600. III. The amount borrowed is 10 times the simple interest in 2 years.
Options- A. .I only
- B. III only
- C. I or II
- D. II and Either I or III only Also asked in: Bank Exams, Bank PO
Correct Answer: II and Either I or III only
Explanation:
I. gives, Rate = 5% p.a.
II. gives, S.I. for 1 year = Rs. 600.
III. gives, sum = 10 x (S.I. for 2 years).
Now I, and II give the sum.
For this sum, C.I. and hence amount can be obtained.
Thus, III is redundant.
Again, II gives S.I. for 2 years = Rs. (600 x 2) = Rs. 1200.
Now, from III, Sum = Rs. (10 x 1200) = Rs . 12000.
Thus,Rate = =5%
Thus, C.I. for 2 years and therefore, amount can be obtained.
Thus, I is redundant.
Hence, I or III redundan
- 10. At 3% annual interest compounded monthly, how long will it take to double your money?
Options- A. 20.1
- B. 21.1
- C. 22.1
- D. 23.1 Also asked in: Bank Exams, Bank PO
Correct Answer: 23.1
Explanation:
At first glance it might seem that this problem cannot be solved because we do not have enough
information. It can be solved as long as you double whatever amount you start with. If we start with
$100, then P = $100 and FV = $200.
FV=P(1+r/n)^nt
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