Quantitative Aptitude > Interest
SIMPLE & COMPOUND INTEREST MCQs
Compound Interest, Simple Interest, Interest (combined)
Given, Principal amount (P) = ?Amount after 2 years (A2) = Rs. 14,520Amount after 3 years (A3) = Rs. 15,972Rate of interest (r) = ?Time (n) = ?
As we know, the formula to calculate compound interest is:A = P (1 + r/n)^(n*t)
where,A = AmountP = Principal amountr = Rate of interestn = Number of times interest is compounded in a yeart = Time
Since the interest is compounded annually, we can assume that n = 1
Using the above formula, we can form two equations based on the given information:
Equation 1: 14,520 = P (1 + r/1)^(12)Equation 2: 15,972 = P (1 + r/1)^(13)
We can solve these equations to find the value of r.
Dividing equation 2 by equation 1, we get:
15,972/14,520 = (1 + r)^1/(1 + r)^21.1013 = 1/(1 + r)
Taking the reciprocal of both sides, we get:
1/(1.1013) = 1 + rr = 0.0916 or 9.16%
Therefore, the rate of interest is 9.16%. However, this is the annual rate of interest. The question asks for the rate of interest per annum. We can convert the annual rate of interest to per annum rate by using the formula:
Per annum rate = (1 + Annual rate/n)^n - 1
where n is the number of times the interest is compounded in a year.
In this case, n = 1 (since the interest is compounded annually)
Per annum rate = (1 + 0.0916/1)^1 - 1= 0.10 or 10%
Hence, the correct answer is option B (10%).If you think the solution is wrong then please provide your own solution below in the comments section .
• Compound interest is the interest earned on the initial principal and previously accumulated interest.
• It is calculated as the sum of the initial principal and the accumulated interest from previous periods.
• Interest is usually applied at regular intervals, such as annually, semi-annually, quarterly, or monthly. • Compound Interest Formula: A=P(1+r/n)^nt
• Where, A = Accrued Amount (principal + interest) P = Principal Amount r = Rate of Interest n = Number of times the interest is compounded per year t = Time in years
• Given: Ratio of Amount after 3 years and 2 years = 21:20
• To calculate the rate of interest (r) Step 1: We need to calculate the Accrued Amount (A) after 3 years and 2 years separately.
• A = P(1+r/n)^nt
• P = 1 (any value) t = 3 and 2 n = 1 (any value)
• Substituting the values in the equation, Accrued Amount (A) after 3 years = P(1+r/n)^3 Accrued Amount (A) after 2 years = P(1+r/n)^2
• Since we need to calculate the rate of interest (r), we will equate the ratio of Accrued Amount (A) after 3 years and 2 years to the given ratio. 21:20 = P(1+r/n)^3 : P(1+r/n)^2 Step 2:
• After simplifying the equation, 2.1 = (1+r/n)^3 : (1+r/n)^2 Step 3:
• Taking the log on both sides of the equation, • ln 2.1 = ln [ (1+r/n)^3 : (1+r/n)^2 ]
• ln 2.1 = 3 ln (1+r/n) – 2 ln (1+r/n)
• ln 2.1 = ln (1+r/n)
• r/n = 2.1 – 1
• r = (2.1 – 1) x n
• Since n = 1
• r = 2.1 – 1
• r = 1.1
• Hence, rate of interest (r) = 1.1 x 100
• Rate of interest (r) = 5% Hence, the rate of interest is 5%.
If you think the solution is wrong then please provide your own solution below in the comments section .
The given problem involves finding the loss suffered by Indu if she had given Rs 1250 to Bindu on simple interest for two years at a rate of 4% per annum.
To solve this problem, we need to first calculate the amount that Bindu would receive on simple interest.
Simple Interest (SI) formula: SI = Prt/100, where P is the principal amount, r is the rate of interest, and t is the time period.
Here, P = Rs 1250, r = 4%, and t = 2 years.
SI = (1250 * 4 * 2)/100 = Rs 100
Therefore, Bindu would receive Rs 1350 at the end of 2 years on simple interest.
Now, to calculate the loss suffered by Indu, we need to find the difference between the amount given to Bindu on simple interest and the amount that she would have received on compound interest.
Compound Interest (CI) formula: A = P(1 + r/100)^t, where A is the amount after t years, P is the principal amount, r is the rate of interest, and t is the time period.
Here, P = Rs 1250, r = 4%, and t = 2 years.
A = 1250(1 + 4/100)^2 = Rs 1369.04
Loss suffered by Indu = CI - SI
= Rs 1369.04 - Rs 1350
= Rs 19.04
Therefore, Indu would suffer a loss of Rs 19.04 if she had given Rs 1250 to Bindu on simple interest instead of compound interest.
However, the question asks for the amount of loss suffered by Indu, which is not given as an option. The closest option is Option A, which states that the loss suffered is Rs 2. This is incorrect, as we have calculated the loss to be Rs 19.04.
If you think the solution is wrong then please provide your own solution below in the comments section .