Introduction
What is compound interest?
Compound interest is the addition of interest to the principal sum of a loan or deposit, or in other words, interest on interest. It is the result of reinvesting interest, rather than paying it out, so that interest in the next period is then earned on the principal sum plus previously accumulated interest.
Compound Interest is one of important topic in Quantitative Aptitude Section. In Compound Interest Quiz 9 article candidates can find questions with answer. By solving this questions candidates can improve and maintain, speed, and accuracy in the exams. Compound Interest Quiz 9 questions are very useful for different exams such as IBPS PO, Clerk, SSC CGL, SBI PO, NIACL Assistant, NICL AO, IBPS SO, RRB, Railways, Civil Services etc.
Q1
A sum of money is lent for 2 years at 20% p.a. compound interest. It yields Rs 482 more when compounded semi-annually than compounded annually. What is the sum lent?
- A. Rs 25,600
B. Rs 20,000
C. Rs 26,040
D. Rs 40,500
[latex]P {[1 + \frac {(\frac {r}{2})}{100}]}^{4} – P{[1 + \frac {r}{100}]}^{2} = 482[/latex]
[latex] P {[\frac {1 + 10}{100}]}^{4} – P{[1 + \frac {20}{100}]}^{2} = 482[/latex]
Solve, P = 20,000
Q2
The compound interest obtained after 1st and 2nd year is Rs 160 and Rs 172.8 respectively on a certain sum of money invested for 2 years. What is the rate of interest?
- A. 10%
B. 8%
C. 8.5%
D. 9%
Difference in interest for both yrs = 172.8 – 160 = 12.8
So [latex](\frac {r}{100}) \times 160 = 12.8 \Rightarrow 8%[/latex]
Q3
A sum of money becomes Rs 35,280 after 2 years and Rs 37,044 after 3 years when lent on compound interest. Find the principal amount.
- A. Rs 32,000
B. Rs 28,000
C. Rs 31,500
D. Rs 32,500
[latex] P{[1 + \frac {r}{100}]}^{3} = 37,044, and P{[1 + \frac {r}{100}]}^{2} = 35,280[/latex]
Divide both equations, [latex][1 + \frac {r}{100}] = \frac {37044}{35280} = \frac {21}{20}[/latex]
So [latex]P{[\frac {21}{20}]}^{2} = 35280[/latex]
Q4
The difference between compound interest earned after 3 years at 5% p.a. and simple interest earned after 4 years at 4% p.a. is Rs 76. Find the principal amount.
- A. Rs 32,000
B. Rs 28,000
C. Rs 31,500
D. Rs 32,500
[latex][P{[1 + \frac {5}{100}]}^{3} – P] – P \times 4 \times \frac {4}{100} = 76[/latex]
[/latex]P [\frac {9261}{8000} – 1 – \frac{16}{100}] = 76[/latex]
Q5
A sum of money borrowed at 5% compound interest is to paid in two annual installments of Rs 882 each. What is the sum borrowed?
- A. Rs 1650
B. Rs 2340
C. Rs 2630
D. Rs 1640
[latex]P = \frac {882}{[1 + \frac {5}{100}]} + {\frac {882}{[1 + \frac {5}{100}]}}^{2}[/latex] = Rs 1640