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
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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
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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%
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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%
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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
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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
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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
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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
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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
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Correct Answer : C
Explanation :
Amount = Rs. [ 7500 ( 1 + 4 / 100 ^2 ) ]
Rs. [ 7500 * 26 / 25 * 26 / 25 ] = 8112
C.I. = 8112 – 7500 = Rs. 612
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