This Article consist of most important ” Compound Interest Questions and Answers ” that are mostly asked in all competitive exams. We collected these questions from the students who appeared in exams. Now try to solve these questions.

## Compound Interest Questions and Answers

**Question : 1** If the simple interest on a sum of money for 2 years at 5% per annum is Rs. 60, what is the compound interest on the same at the same rate and for the same time?

A. 63.5

B. 62

C. 61.5

D. 64

**Show Answer**

**Correct Answer : ** **C**

**Explanation : **

Sum, P = 100×SIRT=100×605×2=Rs. 600

Amount after 2 years on Rs.600 at 5% per annum when interest is compounded annually

=P(1+R100)T=600(1+5100)2=600(105100)2=600×105×105100×100=6×105×105100=Rs. 661.5

Compound Interest = 661.5 – 600 = 61.5

**Question : 2** The difference between compound interest and simple interest on an amount of Rs. 15,000 for 2 years is Rs. 96. What is the rate of interest per annum?

A. 6%

B. 12%

C. 8%

D. 9%

**Show Answer**

**Correct Answer : ** **C**

**Explanation : **

Let the rate of interest per annum be R%

Amount after 2 years on Rs.15000 when interest is compounded annually =P(1+R100)T=15000(1+R100)2Compound Interest =15000(1+R100)2−15000=15000[(1+R100)2−1]Simple Interest = PRT100=15000×R×2100=300R

Difference between compound interest and simple interest = Rs.96

15000[(1+R100)2−1]−300R=9615000[1+2R100+(R100)2−1]−300R=9615000[2R100+(R100)2]−300R=96300R+15000(R100)2−300R=9615000(R100)2=9615000(R210000)=963(R22)=96R2=64R=8

Rate of interest per annum = 8%

**Question : 3** The difference between simple and compound interests compounded annually on a certain sum of money for 2 years at 4% per annum is Re. 1. The sum is:

A. Rs. 600

B. Rs.645

C. Rs.525

D. Rs.625

**Show Answer**

**Correct Answer : ** **D**

**Explanation : **

Let the sum be Rs.x

Amount after 2 years on Rs.x at 4% per annum when interest is compounded annually =x(1+4100)2=x(104100)2Compound Interest = x(104100)2−x=x[(104100)2−1]=x[(2625)2−1]=x[676625−1]=x[51625]=51x625Simple Interest = PRT100=x×4×2100=2×25

Given that difference between compound interest and simple interest is Rs.1

⇒51×625−2×25=1⇒51x−50×625=1⇒x=625

**Question : 4** There is 80% increase in an amount in 8 years at simple interest. What will be the compound interest of Rs. 14,000 after 3 years at the same rate?

A. Rs.3794

B. Rs.3714

C. Rs.4612

D. Rs.4634

**Show Answer**

**Correct Answer : ** **D**

**Explanation : **

Let P = Rs.100

Simple Interest = Rs. 80 ( ∵ 80% increase is due to the simple interest)

Rate of interest=100×SIPT=100×80100×8=10% per annum

Now let’s find out the compound interest of Rs. 14,000 after 3 years at 10%

P = Rs.14000

T = 3 years

R = 10%

Amount after 3 years =P(1+R100)T=14000(1+10100)3=14000(110100)3=14000(1110)3=14×113=18634

Compound Interest = Rs.18634 – Rs.14000 = Rs.4634

**Question : 5 ** The Compound Interest on Rs.7500 for 2 year at 4% per annum is

A. Rs. 632

B. Rs. 602

C. Rs. 612

D. Rs. 621

**Show Answer**

**Correct Answer : ** **C**

**Explanation : **

Amount = Rs. [ 7500 ( 1 + 4 / 100 ^2 ) ]
Rs. [ 7500 * 26 / 25 * 26 / 25 ] = 8112

C.I. = 8112 – 7500 = Rs. 612