Compound Interest - Quantitative Aptitude (MCQ) questions

1)   Rohit invests a sum of money at compound interest which doubles itself in 3 years, find in how many years will it amount to four times itself ?
- Published on 22 Apr 16

a. 4
b. 6
c. 10
d. 14
e. None of these
Answer  Explanation 

ANSWER: 6

Explanation:
Case (I) When Time (T) = 3 years, principle P becomes 2P.
Therefore, amount = 2P
A = P (1 + R/100)T
2P = P (1 + R/100)3
(1 + R/100)3 = 2
(1 + R/100) = 3√2 -------- (A)
(III) Find T for which P becomes 4P
When Time = X and Amount = 4P
4P = P (1 + R/100)X
(1 + R/100)X = 4
(1 + R/100) = 41/X --------- (B)
Equating (A) and (B) we get,
41/X = 3√2 = 21/3
22/X = 21/3
2/X = 1/3
X = 6 years


2)   What will be the difference between simple interest and compound interest @ 10% per annum on a sum of Rs. 1000 after 3 years?
- Published on 06 Apr 16

a. Rs. 31
b. Rs. 32.10
c. Rs. 40.40
d. Rs. 64.10
e. None of these
Answer  Explanation 

ANSWER: Rs. 31

Explanation:
S.I. = Rs. [(1000 x 10 x 3) / 100] = Rs. 300
C.I. = Rs. [1000 x (1 + (10/100))3 - 1000] = Rs. 331
Difference = Rs. (331 - 300) = Rs. 31


3)   Find the compound interest on Rs. 25000 in 2 years at 4% per annum. The interest being compounded half yearly.
- Published on 25 Mar 16

a. Rs 3570.250
b. Rs 2896.598
c. Rs 2060.804
d. Rs 1050.200
Answer  Explanation 

ANSWER: Rs 2060.804

Explanation:
Given:
Principal = Rs. 25000, Rate = 4 % per half year, Time = 2 years = 4 half years
Therefore,
Amount = P( 1 + (R/2)/100)2n

Amount = Rs. [25000*(1+ 2/100)4] = Rs. (25000 * 51/50*51/50*51/50* 51/50)
= Rs. 27060.804
Therefore,
C.I. = Rs. ( 27060.804 – 25000)
= Rs 2060.804


4)   A sum of money becomes Rs 13,380 in 3 years and Rs 20,070 in 6 years at compound interest. The initial sum is?
- Published on 12 Jun 15

a. Rs 9040
b. Rs 8900
c. Rs 8920
d. Rs 9160
Answer  Explanation 

ANSWER: Rs 8920

Explanation:
Use the formula Amount = Principal Amount(1 + R/100)n

Where r is rate and t is time in years

=>13,380 = P(1+R/100)2 --(1)

=>20,070 = P(1+R/100)6 --(2)

=> 1.5 = (1+R/100)4

=> P = Rs 8920


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