# Top 100+ Compound Interest Questions and Answers - 1

Question: 1

What will be the difference between simple and compound interest @ 10% per annum on a sum of Rs. 1000 after 4 years?

(A) Rs. 31

(B) Rs. 40.40

(C) Rs. 64.10

(D) Rs. 74.20

Ans: C

S.I. = Rs. \$\$({1000 × 10 × 4} / {100})\$\$ = Rs. 400.

C.I. = Rs. \$\$[1000 × (1 + {10}/{100})^4 - 1000]\$\$ = Rs. 464.10.

Difference = Rs. (464.10 – 400) = 64.10.

Question: 2

The simple interest on a certain sum of money for 3 years at 8% per annum is half the compound interest on Rs. 4000 for 2 years at 10% per annum. The sum placed on simple interest is

(A) Rs. 1550

(B) Rs. 1650

(C) Rs. 1700

(D) Rs. 1750

Ans: D

C.I. = Rs. \$\$[4000 × (1 + {10} / {100})^2 - 4000]\$\$

= Rs. \$\$(4000 × {11} /{10} × {11} / {10} – 4000)\$\$ = Rs. 840.

∴ Sum = Rs. \$\$({420 × 100} / {3 × 8})\$\$ = Rs. 1750.

Question: 3

The effective annual rate of interest corresponding to a nominal rate of 6% per annum payable half yearly is

(A) 6%

(B) 6.07%

(C) 6.09%

(D) 6.10%

Ans: C

Amount of Rs. 100 for 1 year when compounded half yearly

= Rs. \$\$[100 × (1 + {3} /{100})^2]\$\$ = Rs. 106.09.

∴ Effective rate = (106.09 – 100)% = 6.09%.

Question: 4

The difference between simple interest and compound interest on Rs. 1200 for one year at 10% per annum reckoned half yearly is

(A) Rs. 3

(B) Rs. 3.25

(C) Rs. 3.75

(D) Rs. 4

Ans: A

S.I. = Rs. \$\$({1200 × 10 × 1} / {100})\$\$ = Rs. 120.

C.I. = Rs. \$\$[1200 × (1 + 5 / 100)^2 - 1200]\$\$ = Rs. 123.

Difference = Rs. (123 – 120) = Rs. 3.

Question: 5

What will be the compound interest accrued on an amount of Rs. 10000 % 20 p.c.p.a. in 2 years if the interest is compound half yearly?

(A) Rs. 4600

(B) Rs. 4641

(C) Rs. 4680

(D) Rs. 4820

Ans: B

P = Rs. 10000, R = 20%, p.a. = 10% per half year.

T = 2 years = 4 half years.

Amount = Rs. [10000 × \$\$(1 + {10} / {100})^4\$\$]

= Rs. \$\$(10000 × {11} / {10} × {11} / {10} × {11} / {10} × {11] / {10})\$\$ = Rs. 14641.

∴ C.I. = Rs. (14641 – 10000) = Rs. 4641.

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