# Simple and Compound Interest

**Simple and Compound Interest** - Simple and Compound Interest is the most important topic from the exam point of view. It is one of the common topics in all the aptitude based exams. One should have command over percentage in order to crack Simple and Compound Interest problems. Simple and Compound Interest is one of the most important topics of Quantitative Aptitude. In our school days, we have learned to solve the problems of this topic by using some formulas to find Simple Interest, Compound Interest, the difference between Simple Interest and Compound Interest formula but the exam bodies ask some tricky questions on this topic. So, we need to know the percentage way to solve problems related to simple & compound interest.

**The major question types asked in the simple and compound interest are as follows**

Finding Rate/Time/Interest/Principal/Amount In Simple Interest

Finding Rate/Time/Interest/Principal/Amount In Compound Interest

Questions-based on differences between simple and compound interest

Questions based on becoming amount ‘n’ times of itself

Questions based on Simple Interest Installments

Questions based on Compound interest Installments

## How to prepare simple and compound interest?

You should be well versed with the concepts of percentages before coming to this chapter.

Learn to solve the problems using base 100 and fractions.

Avoid formulaic approach to solve the questions.

Learn some tricks applicable to some specific kind of problems.

Try to solve as many problems as you can from diversified sources.

Take online tests to understand the latest trend of questions.

## Practice questions of Simple & Compound Interest

**Q 1. Find the simple interest earned on Rs.20000 for 2 years at 10% p.a.**

Rs.4500

Rs.2000

Rs.4000(Correct)

Rs.5000

Rs.6000

**Q 2. If Rs.2000 amounts to Rs.2500 in 2 years at simple interest, what is the rate of interest per annum?**

8%

37.5%

22%

12.5% (Correct)

25%

**Q 3. The interest for the 3rd year on a certain sum at a certain rate of simple interest is Rs.3000. find the sum of the interest accrued on it in the 6th, 7th and 8th years.**

Rs.3000

Rs.9000 (Correct)

Rs.4500

Rs.12000

Rs.6000

**Q 4. A sum doubles in 8 years at simple interest. In how many years will the sum become 4 times the original sum?**

16

24 (Correct)

64

40

32

**Q 5. Find the present value (in Rs.) of Rs.3000 due after 5 years at 10% p.a. simple interest.**

1600

1800

2000 (Correct)

2500

1500

**Q 6. What would a sum of Rs.8800 amount to in 16 years at a simple interest rate of 12% every year?**

Rs.20000

Rs.18846

Rs.25696 (Correct)

Rs.32322

Rs.14440

**Q 7. A sum of money invested at simple interest amounts to Rs 2480 at the end of four years and Rs.4080 at the end of eight years. Find the principal.**

Rs.2040

Rs.1600

Rs.1240

Rs.880 (Correct)

Rs. 1480

**Q 8. Ashok has to deposit a total of Rs.18000 in two savings schemes of a bank, of which the first one yields a simple interest of 6% p.a. and the second one yields 8% p.a. simple interest. How much should Ashok deposit in the first scheme so that the total amount deposited earns interest at a rate of 7.6% p.a.?**

Rs.4400

Rs.3600 (Correct)

Rs.7200

Rs.3500

Rs.5600

**Q 9. Raju took a loan at 8% per annum simple interest for a period of 5 years. At the end of five years he paid Rs.10640 to clear his loan. How much loan did he take?**

Rs 8500

Rs 8000

Rs 7700

Rs 7600 (Correct)

Rs 7500

**Q 10. What annual instalment will discharge a debt of Rs.1815 due in 3 years at 10% simple interest?**

Rs.500

Rs.530

Rs.550 (Correct)

Rs.580

Rs.520

**Q 11. A man borrowed Rs.80000 at the rate of 10% p.a. compound interest, interest being compounded annually. How much amount should he have repaid at the end of the first year, if by repaying Rs.55000 at the end of the second year he can clear the loan?**

Rs.38000 (Correct)

Rs.33000

Rs.45000

Rs.50000

Rs.40000

**Q 12. A certain loan amounts, under compound interest, compounded annually earns an interest of Rs.1980 in the second year and Rs.2178 in the third year. How much interest did it earn in the first year?**

Rs.1600

Rs.1800 (Correct)

Rs.2100

None of these

Rs.1900

**Q 13. A sum of money under compound interest doubles itself in 4 years. In how many years will it become 16 times itself?**

12 years

16 years (Correct)

10 years

None of these

8 years

**Q 14. A sum of money is lent at a certain rate of interest at compound interest. If, instead the same amount was lent at simple interest the interest for the first two years reduces by Rs.160 and that for the first three years reduces by Rs.488. Find the sum**

Rs.22000

Rs.46000

Rs.52000

Rs.64000 (Correct)

Rs.46000

**Q 15. I invested Rs.50000 in a business. In the first year I suffered a loss of 5%. In the second and the third years (assuming that profit was reinvested for the next year), I made profits of 10% and 15%. Instead had I invested the money at 10% p.a. compound interest for the three years, how much additional amount would I have earned?**

Rs.3842.50

Rs.6460.50

Rs.6462.50 (Correct)

Rs 8842

Rs.4242.50

**Q 16. A certain sum of money increased by 72.8% at a certain rate in three years with interest being compounded annually. If the same sum is lent at simple interest at the same rate of interest, in how many years would it become four times itself?**

5 years

8 years

6 years

15 years (Correct)

11 years

**Q 17. The compound interest earned in the third and the fourth years on a certain sum of money are Rs.576 and Rs.691.2. Find the sum.**

Rs.1400

Rs.1200

Rs.1600

Rs.2000 (Correct)

Rs.1000

**Q 18. A man borrowed Rs.25000 from a bank at 20% compound interest. At the end of every year he paid Rs.8000. At the end of the third year, he wanted to clear the loan. How much should he pay to clear the loan'?**

Rs.12400

Rs.16040

Rs.16000

Rs.22080 (Correct)

Rs.20800

**Q 19. Find the present worth of Rs.1749.6 due in 2 years at 8% per annum compound interest.**

Rs.1200

Rs.1220

Rs.1500 (Correct)

Rs.1650

Rs.1400

**Q 20. A sum of Rs.2310 is due to be repaid at the end of two years. If it has to be repaid in two equal annual instalments (the instalments being paid at the beginning of the year) at 10% p a. compounded annually, find the value of each instalment.**

Rs.1210

Rs.1000

Rs.1100 (Correct)

Rs.1110

Rs.1331

**Q 21. Find the compound interest earned on Rs.20000 for 2 years at 10% p.a. the interest being compounded annually.**

Rs. 2800

Rs.4200 (Correct)

Rs.6300

Rs.5600

Rs.2100

**Q 22. If Rs.2000 amounts to Rs.2880 in 2 years at compound interest, what is the rate of interest per annum if the interest is being compounded annually?**

10%

20% (Correct)

15%

30%

25%

**Q 23. Find the interest earned in the first year on Rs.400 at 20%p.a. compound interest, the interest being compounded half yearly.**

Rs.59

Rs.72

Rs.84 (Correct)

Rs.144

Rs.42

**Q 24. The difference between the interest earned on a principal under a certain rate of compound interest in pth year and (p + 1)th year is more than that in the qth year and (q + 1)th year if**

p > q (Correct)

p = q

can't say

p<q

**Q 25. Find the effective rate of interest if the normal rate of interest is 10% p.a. and the interest is compounded every six months.**

21.5%

10.25% (Correct)

5.25%

11%

10%