Compound interest is the addition of interest to the principal sum of a loan or deposit, or in other words, interest on principal plus interest. It is the result of reinvesting interest, or adding it to the loaned capital rather than paying it out, or requiring payment from borrower, so that interest in the next period is then earned on the principal sum plus previously accumulated interest. Compound interest is standard in finance and economics.
Compound interest is contrasted with simple interest, where previously accumulated interest is not added to the principal amount of the current period, so there is no compounding. The simple annual interest rate is the interest amount per period, multiplied by the number of periods per year. The simple annual interest rate is also known as the nominal interest rate (not to be confused with the interest rate not adjusted for inflation, which goes by the same name).Compound interest is the addition of interest to the principal sum of a loan or deposit, or in other words, interest on principal plus interest. It is the result of reinvesting interest, or adding it to the loaned capital rather than paying it out, or requiring payment from borrower, so that interest in the next period is then earned on the principal sum plus previously accumulated interest. Compound interest is standard in finance and economics.
Compound interest is contrasted with simple interest, where previously accumulated interest is not added to the principal amount of the current period, so there is no compounding. The simple annual interest rate is the interest amount per period, multiplied by the number of periods per year. The simple annual interest rate is also known as the nominal interest rate (not to be confused with the interest rate not adjusted for inflation, which goes by the same name).Compound interest is the addition of interest to the principal sum of a loan or deposit, or in other words, interest on principal plus interest. It is the result of reinvesting interest, or adding it to the loaned capital rather than paying it out, or requiring payment from borrower, so that interest in the next period is then earned on the principal sum plus previously accumulated interest. Compound interest is standard in finance and economics.
Compound interest is contrasted with simple interest, where previously accumulated interest is not added to the principal amount of the current period, so there is no compounding. The simple annual interest rate is the interest amount per period, multiplied by the number of periods per year. The simple annual interest rate is also known as the nominal interest rate (not to be confused with the interest rate not adjusted for inflation, which goes by the same name).
2. INTRODUCTION OF S.I:
In Simple Interest the Principal is
constant through out each and
every year.
As the interest is calculated only on
the Principal in case of Simple
Interest, it is constant through out
each and every year.
Suppose the interest in 5 years is
Rs5000, in each year it is Rs1000.
3. METHOD TO SOLVE
The question on Simple Interest, it must be
based on percentage.
• Take the sum as Rs100, so that at any
rate of interest for any number of years
we can find out the interest.
• Then by taking the comparison the
given sum with Rs100, we can find out
the interest on it.
• Similarly
• If sum is given by taking the
comparison we can find out amount
from the sum or sum from the amount.
4. EXAMPLE:
Find the S.I. on Rs4800 @
2.5%p.a. for 10 years.
(a)Rs1000
(b)Rs1200
(c)Rs1250
(d)Rs1280
5. COMPOUND INTEREST
Introduction:
In case of compound Interest, the
interest is calculated on the
Principal as well as interest.
So the interest is not constant
throughout each and every year.
In each year, the interest is more
than the previous interest by that
rate percentage.
6. METHOD TO FIND COMPOUND
INTREST:
If it is compounded annually:
• Find out the interest in the first
year at the given rate of interest.
• Then in each year, the interest is
more than the previous interest
by that rate percentage.
• Then add all the interest for the
mentioned time to get the
Compound interest.
7. EXAMPLE
What is the compound
interest on Rs24000 @ 5%
p.a. for 3 years?
(a)Rs3000
(b)Rs3200
(c)Rs3600
(d)Rs3783
8. If it is compounded half yearly:
If the rater of interest is r% p .a,
then half yearly it is 1/2 of r%.
• Find out the interest in the first
six months at the half of the
given rate of interest.
• Then in each six months, the
interest is more than the
previous six months interest by
half of that rate percentage.
• Then add all the interest for the
mentioned time to get the
Compound interest.
9. EXAMPLE:
What is the compound
interest on Rs20000 @ 8%
p.a. for 1.5years, if it is
compounded half yearly?
(a)Rs2400
(b)Rs2497.28
(c)Rs2500
(d)Rs2650
10. If it is compounded quarterly:
If the rater of interest is r%p.a, then
quarterly it is 1/4th of r%.
• Find out the interest in the first
quarter at the one-fourth of the
given rate.
• Then in each quarter, the interest
is more than the previous quarter
interest by one-fourth of that rate
percentage.
• Then add all the interest for the
mentioned time to get the
Compound interest.
11. EXAMPLE
What is the compound
interest on Rs30000 @
12%p.a.for 9months, if it is
compounded quarterly?
(a)Rs2700
(b)Rs2781.81
(c)Rs2800
(d)Rs3000
12. If the sum, amount and the
time is given and we have to
find rate of interest p.a.
Method:
• Take the ratio of sum and
amount for the given years.
• After 1 year, ratio of sum
and amount is Year root of
the previous ratio.
13. Example:
If Rs16000 amounts to
Rs18522 after 3 years in
Compound interest, find
the rate of interest per
annum.
14. If the sum, amount and the rate of
interest is given and we have to
find time period.
Method:
• Take the ratio of sum and amount
for the given years.
• Take the ratio of the sum and the
amount by taking the sum as
Rs100 find out the amount after 1
year.
• Then mark the ratio of the sum
and amount is which power of
the ratio after 1year as the time
period.
16. If the Simple interest on a certain sum in a
certain period at a certain rate of interest is
given and we have to find the compound
interest on the same sum at the same rate
for the same period:
Method:
• Find out the simple interest in 1 year.
• Then the simple interest in 1 year is
equal to the compound interest in the
first year.
• Then find out the compound interest
from second year onwards by
increasing each interest by that rate
percent in each year over the previous
year interest.
• Then add the total compound interest
for the given time.
17. Example:
If the S.I on a certain sum of
money in 2 years @ 6%p.a. is
Rs3600, then what will be the
C.I. on the same sum at the
same rate for the same
period?
18. If the Compound interest on a
certain sum in a certain period at a
certain rate of interest is given and
we have to find the Simple interest
on the same sum at the same rate
for the same period:
Method:
• Take the sum as Rs100 and find out the
compound interest and simple interest
for the given time at the given rate of
interest.
• Then by taking the comparison find out
the simple interest with respect to the
compound interest.
19. Example:
If the C.I on a certain sum
of money in 2 years @
5%p.a. is Rs2050, then
what will be the S.I. on the
same sum at the same rate
for the same period?
20. If the difference between the S.I &
C.I on a certain sum at a certain
rate for a certain period is given
and we have to find the sum:
Method:
• Take the sum as Rs100 and find
out the S.I. & C.I at the given rate
for the given period.
• Then by taking the difference
between S.I & C.I by taking the
comparison with it with Rs100
find out the sum.
21. Example:
If the difference between the
C.I & S.I on a certain sum of
money @ 8%p.a. in 2 years is
Rs128, find the sum.
23. Question:2
If a certain sum amounts
to Rs7800 in 5 years @ 6%
p.a. at S.I, find the sum.
(a)Rs5000
(b)Rs6000
(c)Rs7200
(d)Rs7500
24. Question:3
What will be the amount
on Rs8000 @ 5% p.a. in 6
years at S.I?
(a)Rs10000
(b)Rs10400
(c)Rs12000
(d)Rs12500
25. Question:4
If a certain sum doubles it
self in 9 years at S.I, then
it will be four times in how
many years?
(a)18years
(b)24years
(c)27years
(d)36years
26. Question:5
If a certain sum triples it
self in 25 years at S.I, find
the rate percent p.a.
(a)6%p.a.
(b)7.5%p.a.
(c)8%p.a.
(d)10%p.a.
27. Question:6
If a certain sum doubles it
self @ 12.5 p.a. at S.I. find
the time period.
(a)6years
(b)7years
(c)8years
(d)9years
28. Question:7
A sum was put at a certain
rate of interest for 6 years at
S.I. Had it been put at 3%
higher rate it would have
fetched Rs540 more interest.
Find the sum.
(a)Rs2000
(b)Rs2500
(c)Rs3000
(d)Rs4000
29. Question:8
If the S.I on a certain sum
in 7 years @ 5% p.a. is
Rs780 less than the sum
find the sum.
(a)Rs800
(b)Rs1000
(c)Rs1200
(d)Rs1500
30. Question:9
The S.I. on a certain sum for the
first 2 years is 3%p.a. for the next 3
years 4%p.a. and for the period
beyond 5 years 6%p.a. respectively.
If the total interest in 8 years is
Rs1080, find the sum.
(a)Rs2000
(b)Rs3000
(c)Rs4000
(d)Rs5000
31. Question:10
What annual payment will
discharge a debt of
Rs8480 due in 4 years
hence @ 4% p.a. at S.I.?
(a)Rs2000
(b)Rs3000
(c)Rs4000
(d)Rs5000
32. Question:11
In simple interest what
sum amounts to Rs1120 in
4 years and Rs1200 in 5
years?
(a)Rs750
(b)Rs800
(c)Rs850
(d)Rs900
33. Question:12
Rs5000 invested at S.I. @ 6% p.a.
and Rs900 is obtained as interest in
a certain number of years. In order
to earn Rs540 as interest on
Rs6000 in the same number of
years, what should be the rate of
interest?
(a)2%p.a.
(b)3%p.a.
(c)4%p.a.
(d)5%p.a.
34. Question:13
Two equal sums are deposited at
the same time at 5% and 4% simple
interest respectively. The former is
received 2 years earlier than the
later, and the amount in each case
is Rs2800. Find the sum.
(a)Rs2000
(b)Rs2500
(c)Rs3000
(d)Rs3200
35. Question:13
What annual payment will
discharge a debt of
Rs18000 due in 5 years @
10% p.a. at S.I.?
(a)Rs2000
(b)Rs2500
(c)Rs3000
(d)Rs3500
36. Question:14
If the simple interest on
Rs2000, increases by Rs480,
when the time increases by 4
years. Find the rate percent
per annum.
(a)4%
(b)5%
(c)6%
(d)7.5%
37. Question:15
The simple interest on a sum
of money is 1/9th of the
principal, and the number of
years is equal to the rate
percent per annum. Find the
rate percent.
(a)2.5%
(b)3%
(c)3.5%
(d)3 .33%
38. Question:16
If the simple interest on
Rs1500 is more than the
interest on Rs1000 by Rs60 in
3 years, find the rate percent
per annum.
(a)2%
(b)3%
(c)4%
(d)5%
39. IQuestion:17
f simple interest on Rs6000,
increases by Rs480, when the
rate % increases by 2% per
annum. Find the time period.
(a)2years
(b)3years
(c)4years
(d)5years
40. Question:18
Rakish deposited two parts of a
sum of Rs20000 in two different
banks @15%p.a. and 18% p.a.
respectively. In 2 years he got
Rs8100 as the total interest. What
was the amount deposited at the
rate of 18% p.a.?
(a)Rs8000
(b)Rs10000
(c)Rs12000
(d)Rs14000
41. Question:19
A man invests an amount of Rs15,
860 in the names of his three sons
A, B and C in such a way that they
receive the same amount after 2, 3
and 4 years respectively. If the rate
of simple interest is 5% then find
the ratio in which the amount was
invested for A, B and C?
(a)276:264:253
(b)243:264:276
(c)276:265:242
(d)279:265:243
42. Question:20
The S.I on Rs1250 will be
less than the interest on
Rs1400 at3% S.I by
Rs90.Find the time.
(a)12years
(b)15years
(c)18years
(d)20years
43. Question:21
Two equal sums are deposited
in two banks each at 15% for
3.5 years and 5 years
respectively. If the difference
between their interests is
Rs144, find each sum
(a)Rs600
(b)Rs625
(c)Rs640
(d)Rs650
44. The difference between
the interests received from
two different banks on
Rs600 for 6 years is
Rs216. Find the difference
between their rates.
(a)3%
(b)4%
(c)5%
(d)6%
45. Question:22
Out of a certain sum, 1/3rd is
invested at 3%, 1/6th at 6%
and the rest at 8%. If the S.I for
2 years from all these
investments amounts to
Rs672, find the original sum.
(a)Rs500
(b)Rs600
(c)Rs625
(d)Rs650
46. Question:23
A certain sum of money is
borrowed by a person at 6%
S.I for 8 years. If he has to pay
Rs144 as interest, find the
total amount he has to pay.
(a)Rs296
(b) Rs444
(c)RsRs576
(d) None of these
47. Question:24
If the simple interest on
Rs3000, increases by Rs450,
when the time increases by 5
years. Find the rate percent
per annum.
(a) 3%p.a
(b) 4%p.a
(c) 5%p.a
(d) None of these
48. Question:25
A lent Rs1200 to B for 2 years,
and Rs750 to C for 4 years
and received altogether from
both Rs162 as interest. Find
the rate of S.I.
(a) 2%p.a
(b) 3%p.a
(c) 4%p.a
(d) None of these
49. Question:26
If the rate of interest rises
from 6 ½ to 8%, a man’s
income increases by
Rs405. Find the sum.
(a)Rs24000
(b) Rs27000
(c)Rs30000
(d) None of these
50. Question:27
A sum of money invested for a
certain number of years at 8% p.a.
simple interest grows to Rs.180.
The same sum of money invested
for the same number of years at 4%
p.a. simple interest grows to Rs.120
only. For how many years was the
sum invested?
(a) 15yrs
(b) 20yrs
(c) 25yrs
(d) None of these
51. Question:28
A father left a will of Rs.35lakhs between
his two daughters aged 8.5 and 16 such
that they may get equal amounts when
each of them reaches the age of 21 years.
The original amount of Rs.35lakhs has
been instructed to be invested at 10% p.a.
simple interest. How much did the elder
daughter get at the time of the will?
(a)Rs7lakhs
(b) Rs14lakhs
(c)Rs21lakhs
(d) None of these
52. Question:29
If the S.I on a certain sum of
money in 2 years @ 6%p.a. is
Rs2400, then what will be the
C.I. on the same sum at the
same rate for the same
period?
(a)Rs2448
(b)Rs2472
(c)Rs2484
(d)Rs2500
53. Question:30
If the S.I on a certain sum of
money in 3 years @ 5%p.a. is
Rs4800, then what will be the
C.I. on the same sum at the
same rate for the same
period?
(a)Rs5000
(b)Rs5200
(c)Rs5044
(d)Rs5600
54. Question:31
What is the compound
interest on Rs20000 @ 5%
p.a. for 3 years?
(a)Rs3000
(b)Rs3152.50
(c)Rs3600
(d)Rs3750
55. Question:32
Amir invested an amount of Rs8000
in a fixed deposit scheme for 2
years at compound interest rate 5%
p.a. How much amount will Amir
get on maturity of the fixed
deposit?
(a)Rs8600
(b) Rs8620
(c) Rs8820
(d) None of these
56. Question:33
A bank offers 5% compound
interest calculated on half-yearly
basis. A customer deposits Rs2400
each on 1st January and 1st July of
a year. At the end of the year, the
amount he would have gained by
way of interest is:
(a)Rs180
(b) Rs181.50
(c) Rs182
(d) Rs183
57. Question:34
What is the difference
between the compound
interests on Rs5000 for 1
years at 4% per annum
compounded yearly and half-
yearly?
(a)Rs2.04
(b) Rs3.06
(c) Rs4.80
(d) Rs8.30
58. Question:35
The difference between S.I in
one year and compound
interest on Rs1500 for one
year at 10% per annum
reckoned half-yearly is:
(a)Rs2.50
(b) Rs3
(c) Rs3.75
(d) Rs4
60. Question:37
Simple interest on a certain sum of
money for 3 years at 8% per annum
is half the compound interest on
Rs4000 for 2 years at 10% per
annum. The sum placed on simple
interest is:
(a)Rs1550
(b) Rs1650
(c) Rs1750
(d) Rs2000
61. Question:38
The difference between
compound interest and simple
interest on a sum of Rs15, 000
for 2 years is Rs96. What is
the rate of interest per
annum?
(a) 8
(b)10
(c) 12
(d) None of these
62. Question:39
There is 60% increase in an amount
in 6 years at simple interest. What
will be the compound interest of
Rs12, 000 after 3 years at the same
rate?
(a)Rs2160
(b) Rs3120
(c) Rs3972
(d) Rs6240
63. Question:40
The effective annual rate of
interest corresponding to a
nominal rate of 6% per annum
payable half-yearly is:
(a) 6.06%
(b) 6.07%
(c) 6.08%
(d) 6.09%
64. Question:41
The least number of complete
years in which a sum of
money put out at 20%
compound interest will be
more than doubled is:
(a) 3
(b) 4
(c) 5
(d) 6
65. Question:42
A person invested one half of his savings
in a bond that paid simple interest for 2
years and received Rs480 as interest. He
invested the remaining in a bond that paid
compound interest, interest being
compounded annually, for the same 2
years at the same rate of interest and
received Rs492 as interest. What was the
value of his total savings before investing
in these two bonds?
(a)Rs9000
(b) Rs9200
(c) Rs9600
(d) Rs9750
66. Question:43
A man invests Rs.5000 for 3 years
at 5% p.a. compound interest
reckoned yearly. Income tax at the
rate of 20% on the interest earned
is deducted at the end of each year.
Find the amount at the end of the
third year.
(a)Rs5600
(b) Rs5624
(c) Rs5624.32
(d) None of these
67. Question:44
The difference between the
compound interest and the simple
interest on a certain sum at 12%
p.a. for two years is Rs.90. What
will be the value of the amount at
the end of 3 years?
(a) Rs8780.80
(b) Rs8778.80
(c) Rs8080.80
(d) None of these
68. Question:45
Rs. 5887 is divided between Amir
and Samar, such that Amir’s share
at the end of 9 years is equal to
Samar's share at the end of 11
years, compounded annually at the
rate of 5%. Find the share of Samar.
(a) Rs3087
(b) Rs2800
(c) Rs2687
(d) None of these
69. Question:46
The population of a town was 4800
three years back. It is 6000 right
now. What will be the population
three years down the line, if the rate
of growth of population has been
constant over the years and has
been compounding annually?
(a)3000
(b)3200
(c)3600
(d) 3840
70. Question:47
What will be the amount if
sum of Rs.10,00,000 is
invested at compound interest
for 3 years with rate of interest
11%, 12% and 13%
respectively?
(a) Rs.14,04,816
(b)Rs 12,14,816
(c)Rs. 11, 13,816
(d)Rs.16,00,816
71. Question:48
A sum of money is invested at
10% per annum compounding
annually for 2 years. If the
interest received is Rs. 210,
find the principal.
(a) 2100
(b)2500
(c)1900
(d)1000
72. Question:49
If the C.I on a certain sum of
money in 2 years @ 7%p.a. is
Rs2898, then what will be the
S.I. on the same sum at the
same rate for the same
period?
(a)Rs2000
(b) Rs2400
(c)Rs2800
(d)Rs2840
73. Question:50
If the C.I on a certain sum of
money in 3 years @ 10%p.a. is
Rs6620, then what will be the
S.I. on the same sum at the
same rate for the same
period?
(a)Rs5600
(b)Rs6000
(c)Rs6400
(d)Rs6600
74. Question:51
If the difference between the
C.I & S.I on a certain sum of
money @ 7%p.a. in 2 years is
Rs196, find the sum.
(a)Rs30000
(b)Rs36000
(c)Rs40000
(d)Rs44000
75. Question:52
Simple interest on a certain sum of
money for 3 years at 8% per annum
is half the compound interest on
Rs4000 for 2 years at 10% per
annum. The sum placed on simple
interest is:
(a) Rs1550
(b) Rs1650
(c) Rs1750
(d) Rs2000
76. Question:53
There is 60% increase in an amount
in 6 years at simple interest. What
will be the compound interest on
Rs12, 000 after 3 years at the same
rate?
(a)Rs2160
(b)Rs3120
(c)Rs3972
(d)Rs6240
77. Question:54
The difference between
compound interest and simple
interest on an amount of
Rs15, 000 for 2 years is Rs96.
What is the rate of interest per
annum?
(a) 8
(b) 10
(c) 12
(d) None of these
78. Question:55
The difference between simple
and compound interests
compounded annually on a
certain sum of money for 2
years at 4% per annum is Re.
1. The sum (in Rs.) is:
(a) 625
(b) 630
(c) 640
(d) 650
79. Question:56
Shawn invested one half of his savings in
a bond that paid simple interest for 2 years
and received Rs440 as interest. He
invested the remaining in a bond that paid
compound interest, interest being
compounded annually, for the same 2
years at the same rate of interest and
received Rs451 as interest. What was the
value of his total savings before investing
in these two bonds?
Rs8000
(b) Rs8800
(c) Rs9200
(d) None of these
80. If a sum of money grows to 144/121
times when invested for two years
in a scheme where interest is
compounded annually, how long
will the same sum of money take to
treble if invested at the same rate of
interest in a scheme where interest
is computed using simple interest
method?
(a)11 yrs
(b) 20 yrs
(c) 22yrs
(d) None of these
81. Question:57
The difference between S.I in
one year and compound
interest on Rs1500 for one
year at 10% per annum
reckoned half-yearly is:
(a) Rs2.50
(b) Rs3
(c) Rs3.75
(d) Rs4
82. Question:58
Two equal sums are deposited in
two banks each at 12% for 4.5 years
and 6 years respectively. If the
difference between their interests is
Rs162, find each sum
(a)Rs800
(b)Rs900
(c)Rs1000
(d)Rs1200
83. Question:59
The difference between the
compound interest and the simple
interest on a certain sum at 12%
p.a. for two years is Rs.90. What
will be the value of the amount at
the end of 3 years in simple
interest?
(a)Rs8000
(b) Rs8250
(c)Rs8500
(c) Rs8750