Simple and Compound Interest Practice Questions for Quantitative Techniques

Simple and Compound Interest Practice Questions for Quantitative Techniques

Question 1: If Sneha invests some sum of money lets say P in Equity market which amounts to Rs. 990 in 2.5yrs with Simple Interest while it amounts to Rs. 1044 in 4 yrs. Answer the following questions based on the above data.​​ 

  • What is the rate of interest?

a) ​​ 4%  b) 6%  c) 3%  d) ​​ 5%

  • What is the Principal amount that was invested?​​ 

  • Rs.​​ 950 b)​​ Rs.​​ 900 c)​​ Rs.​​ 930 d)​​ Rs.​​ 980

  • In how many years the amount will double itself with Simple Interest at​​ 8%?

  • 12.5 yrsb) 10 yrs  c) 9.09 yrsd) 11.11 yrs

  • If the interest was compounded instead of simple Interest, then how much Sneha would have earned in 3 yrs?​​ Use R as of 1st​​ part of this question.

  • Rs.1008​​  b)​​ Rs.1067  c)​​ Rs.​​ 1012​​   d)​​ Rs.​​ 1030

  • If the rate of compounding increased by 10% after 3 years and two-year compounding is done, what is the amount after 5 years?

  • Rs.​​ 1055 b)​​ Rs.1045 c)Rs.1032 d)​​ Rs.1152​​ 

Question 2: Varun borrowed a total sum of Rs. 250,000 from 2 money lenders. For one loan, he paid interest at 7.5% per annum and the other loan at 10% per annum.​​ The interest calculation is based on Simple Interest concept.

  • If the​​ Total​​ interest paid is 9.35%,​​ What is the​​ interest paid in the 1st​​ year?

  • Rs.26730b) Rs. 23375​​  c) Rs. 24450d) Rs. 25750​​  

  • If the borrowed sum is in the ratio of 3:2, then what is loan amount from 2nd​​ lender?

  • Rs. 100000  b) Rs. 150000​​   c) Rs. 10000 ​​ d) Rs. 15000

  • What is the interest amount to pay for 1st​​ loan with 7.5% in one year?

  • Rs. 11000​​   b) Rs. 15000  c) Rs. 11250 ​​ d) Rs. 10250

  • How many years it would take to pay​​ triple​​ the loan amount?

  • 22 yrs​​   b) 10.695 yrs​​   c) 20.5 yrsd) 21.39 yrs

  • What is the total amount he is paying every year if the period to loan repay is​​ 10yrs?

  • Rs. 48375​​   b) Rs. 45000  c) 50112d) Rs. 47000

 

Solution and Answers

    • Ans: a) ​​ 4%

Sol:  ​​​​ 990 = P( R * 2.5 / 100 + 1)  ​​​​ … eq(1)

 ​​ ​​ ​​ ​​ ​​ ​​ ​​ ​​​​ 1044 = P (R * 4 / 100 +1)  ​​ ​​ ​​​​ … eq(2)

 ​​ ​​ ​​ ​​ ​​ ​​ ​​ ​​​​ Dividing eq(2) by eq(1), we get

 ​​ ​​ ​​ ​​ ​​ ​​ ​​ ​​​​ 1044/990 = (R/25 +1)40/25(R/40+1)

 ​​ ​​ ​​ ​​ ​​ ​​ ​​ ​​​​ On solving the above equation we get R=4%

    • Ans: b)​​ Rs.​​ 900

Sol:​​ Using the equation from the previous question, substituting R=4%, we get P = 900

    • Ans: a) 12.5yrs​​ 

Sol:​​ The formula for doubling the amount will be used here,

 ​​ ​​ ​​ ​​ ​​ ​​ ​​ ​​​​ R= 8%; T = 100/8 = 12.5yrs

    • Ans: c)​​ Rs.​​ 1012

Sol:​​ Amount = P(1+R/100)T

​​ A = 900(1+4/100)3​​ ​​ = 1012.37

    • Ans: d)​​ Rs.​​ 1152

Sol:​​ Rate of Interest increased by 10% after 3 yrs,​​ hnce new R= 4%*1.1 = 4.4%

 ​​ ​​ ​​ ​​ ​​ ​​ ​​​​ Amount = 900(1+4/100)3(1+4.4/100)2​​ (using the formula for different rate of interest.

  ​​ ​​ ​​ ​​ ​​​​ = 1151.97

    •  ​​ ​​ ​​ ​​ ​​​​ Ans:​​ b) Rs. 23375

 ​​ ​​ ​​ ​​ ​​​​ Sol:​​ P =Rs. 250000; Annual R for both loans combined= 9.35%

 ​​ ​​ ​​ ​​ ​​ ​​ ​​ ​​ ​​ ​​ ​​ ​​ ​​​​ Interest =​​ PR*1/100 = 250000*9.35/100 = Rs. 23375

    •  ​​ ​​ ​​ ​​ ​​​​ Ans:​​ a) Rs. 100000

Sol:​​ Ratio of the loan amount is 3:2 for two lenders hence second loan amount would be 2/5 part of Total loan i.e., 250000*2/5 = Rs. 100000

    •  ​​ ​​ ​​ ​​ ​​​​ Ans:​​ c) Rs. 11250​​ 

Sol:​​ As the loan from the first lender was Rs. 250000*3/5 = Rs. 150000

 ​​ ​​ ​​ ​​ ​​ ​​ ​​​​ Interest for the first loan for 1 year = PR*1/100 = 150000*7.5/100 = Rs. 11250

    •  ​​ ​​ ​​ ​​ ​​​​ Ans:​​ d) 21.39 yrs

Sol:​​ The formula for tripling the amount will be used here,

 ​​ ​​ ​​ ​​ ​​ ​​ ​​ ​​​​ R= 9.35%; T = 200/9.35 = 21.39 yrs

    •  ​​ ​​ ​​ ​​ ​​​​ Ans:​​ a) 48375

Sol:​​ Amount = 250000(9.35*10/100 ​​ + 1 ) ​​ = Rs. 483750

 ​​ ​​ ​​ ​​ ​​ ​​ ​​​​ Yearly payment = 483750/10 = Rs. 48375

 

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