Compound Interest- Aptitude Questions and Answers

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A man borrows 12500 from a bank at 20% compound interest. At the end of every year he pays 2000 as part repayment. How much (in rupees) does he still owe to the bank after three such instalments?

A)
15600

B)
12864

C)
13780

D)
14320


Correct Answer :

14320


Explanation :

Remaining amount after 1 year = 12500 *(120/100) - 2000 = 13000
Remaining amount after 2 year = 13000*(120/100) - 2000 = 13600
Remaining amount after 3 year = 13600*(120/100) - 2000 = 14320

A sum of 2400 deposited on compound interest, doubled after 5 years. How much will it be after 20 years?

A)
24000

B)
38400

C)
19200

D)
14320


Correct Answer :

38400


Explanation :

2P = P *(1 + R/100)5
24 P = P *(1 + R/100)20

The amount becomes 24 times = 16 times and required amount = 2400*16 =38400

In how many years Rs 800 will be Rs 882 at 5% per annum if compounded annually?

A)
1 year

B)
2 years

C)
3 years

D)
4 years


Correct Answer :

2 years


Explanation :

amount = P ( 1 + R/100 )n
As is given, 882 = 800*( 1 + 5/100 )n
882/800 = (21/20)n
441/400 = (21/20)n
(21/20)2 = (21/20)n
N=2

How much will the compound interest at the rate of 15/2% annually in 2 years on 6400 rupees?

A)
1016

B)
996

C)
976

D)
966


Correct Answer :

996


Explanation :

compound interest, CI= 6400* (1 + (15 / 2) / 100 )2 - 6400
= 6400* (1 + 15 / 200 )2 - 6400
= 6400* (43 / 40 )2 - 6400
= 6400* (1849 / 1600) - 6400
= 6400* (1849 / 1600 - 1)
= 6400* 249 / 1600 = 996

The difference between the simple and the compound interest on a certain sum of money at 4% per annum in 2 years is 10 rs. What is the sum ?

A)

5,000


B)

6,000


C)

6,250


D)

7,500



Correct Answer :

6,250


Explanation :

Let the sum is 100 then
S.I. = 100* 4* 2 / 100 = 8
C.I = 100 *(1 + 4/100)2 - 100 = 100*( 26/25) 2 - 100 = 204/25
Difference between C.I and S.I = 204/25 - 8 = 4/25 = .16

So, 0.16 : 10 : : 100 : P
∴ P = (10* 100) / 0.16 = 6250

The effective annual rate of interest corresponding to a nominal rate of 22% per annum payable half-yearly is?

A)

44%


B)

23.21%


C)

46.42%


D)

22%



Correct Answer :

23.21%


Explanation :

Amount = P[1+(R/2)/100]2n , if interest is payable half-yearly

Let the amount is 100 for one year
So, effective amount = 100*(1 + 11/100)2
= 100*(1 + 11/100)*(1 + 11/100)
= 111*1.11
= 123.21

Then, Effective rate = 123.21 -100 = 23.21%

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