Quantitative Aptitude: Simple/Compound Interest Set 07

Simple Interest/Compound Interest Questions for IBPS PO, SBI PO, NIACL, NICL, LIC, UICL, Bank of Baroda and other competitive exams.

1. A sum of Rs. 10,000 is borrowed at 8% per annum compounded annually. If the amount is to be paid in three equal installments, the annual installment will be
   A) Rs 3520.25
   B) Rs 3880.335
   C) Rs 4200.15
   D) Rs 4530.225
   E) None
   
   View Answer

   Option B
   Solution:
   Let each installment be x,
   10000=x/(1+8/100) + x/(1+8/100)² + x/(1+8/100)³
   10000=x{25/27 + (25/27) ² + (25/27) ³}
   =x*25/27(1 + 25/27 + 625/729)
   =25x/27 (2029/729)
   x =3880.335
   
2. A sum was put at simple interest at a certain rate for 5 years. Had it been put at 2% higher rate, it would have fetched Rs. 450 more. Find the sum?
   A) Rs 4500
   B) Rs 3200
   C) Rs 3800
   D) Rs 4200
   E) None
   
   View Answer

   Option B
   Solution:
   P*(r+2)*5/100-P*r*5/100=450
   5P(r+2-r)/100=450
   P=Rs4500.
   
3.  Stephen borrowed some money at 6% for the first 4 years, 8% for the next 6 years and 11% for the period beyond 2 years. If the total interest paid by him at the end of eleven years is Rs 5640, how much money did he borrow?
   A) Rs 10000
   B) Rs 6000
   C) Rs 8000
   D) Rs 9000
   E) None
   
   View Answer

   Option B
   Solution:
   Let the sum be P. Then,
   (P*6*4/100) + (P*8*6/100) + (P*11*2/100)=5640.
   24P/100+48P/100+22P/100=5640.
   94P/100=5640==>P=6000.
4. A financier lend money at simple interest, but he includes the interest every six months for calculating the principal. If he is changing an interest of 10%, the effective rate of interest becomes?
   A) 10%
   B) 11.5%
   C) 10.25%
   D) 12%
   E) None
   
   View Answer

   Option C
   Solution:
   Let the sum be Rs. 100. Then,
   S.I. for first 6 months = (100 * 10 * 1/2)/ 100] = Rs.5
   Next 6 months 10% of 5 is Rs 2 is added.
   S.I. for last 6 months =Rs.[(102 * 10 * 1/2)/100] = Rs.5.25
   So, amount at the end of 1 year = Rs. (100 + 5 + 5.25) = Rs. 110.25
   R = (110.25 – 100) = 10.25%
5. Ragav purchases a coat for Rs.2400 cash or for Rs.1000 cash down payments and two monthly installments of Rs.800 each. Find the rate of interest.
   A) 80%
   B) 100%
   C) 110%
   D) 120%
   E) None
   
   View Answer

   Option D
   Solution:
   Amount as a principal for 2 month = 2400 – 1000 = 1400
   At the rate of r% per annum after 2 months, Rs.1400 will amount to Rs 1400 + (1400*r*2/100*12)
   Total amount for 2 installments at the end of second month Rs800+(800+(800*r*1/100*12))
   Then 1400 + 2800*r/1200=1600+ 800*r/1200
   R=120%
   
6. 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.3.5
   C) Rs.4
   D) Rs.5
   E) None
   
   View Answer

   Option A
   Solution:
   SI=1200*10*1/100=120
   CI half yearly ={1200*(1+5/100)² – 1200}=123
   Difference =123-120=3
   
7. A borrows 5000 at simple interest. At the end of 3 years, he again borrows 3000 and finally pays 2340 as interest after 6 years from the time he made the first borrowing. Find the rate of interest per annum.
   A) 4%
   B) 5.5%
   C) 6%
   D) 4.5%
   E) None
   
   View Answer

   Option C
   Solution:
   Let r be the rate of interest
   5000*3x/100 + 8000*3x/100 = 2340
   150x + 240x = 2340
   X = 6
   
8. Arav fixes the rate of interest 5% per annum for first 3 years and for the next 4 years 6 percent per annum and for the period beyond 7 years, 7 percent per annum. If Mr. Kumar lent out Rs.2500 for 11 years, find the total interest earned by him?
   A) 1650
   B) 1565
   C) 1840
   D) 1675
   E) None
   
   View Answer

   Option D
   Solution:
   5% for 3 years = 15%
   6% for 4 years = 24%
   7.5% for 4 years = 28%
   67% of 2500 = 1675
   
9. A certain sum of money amounts to rupees 2900 at 4% per annum in 4 years. In how many years will it amount to rupees 5000 at the same rate?
   A) 30
   B) 25
   C) 22
   D) 18
   E) None
   
   View Answer

   Option B
   Solution:
   2900 = p + p*(4/100)*4, p = 2500
   5000 = 2500 + 2500*(4/100)*t
   5000=2500+100t
   t =25
   
10. Rs.100 doubled in 5 years when compounded annually. How many more years will it take to get another Rs.200 compound interest?
    A) 5
    B) 6
    C) 8
    D) 10
    E) None
    
    View Answer

    Option A
    Solution:
    Rs.100 invested in compound interest becomes Rs.200 in 5 years.
    The amount will double again in another 5 years.
    i.e., the amount will become Rs.400 in another 5 years.
    So, to earn another Rs.200 interest, it will take another 5 years.