Question 1
Arslan invested Rs. 10,000 at 8% per annum compound quarterly, then the value of the investment after 2 years is: [given (1.02)8 = 1.171659]
A
Rs. 11,716.59✓✗
B
Rs. 10,716.59✓✗
C
Rs. 117.1659✓✗
D
None of the above✓✗
Explanation
A = P × (1.02)8 = 10,000 × 1.171659 = Rs. 11,716.59
Question 2
The difference between compound and simple interest at 5% per annum for 4 years on Rs. 20,000 is:
A
250✓✗
B
277✓✗
C
300✓✗
D
310✓✗
Explanation
SI = 20000 × 5 × 4100 = 4000
CI = 20000 × (1.05)4 - 20000 = 20000 × 1.21550625 - 20000 = 24310.125 - 20000 = 4310.125
Difference = 4310.125 - 4000 ≈ 310
Question 3
A sum of money doubles itself at compound interest in 10 years. In how many years will it become eight times?
A
10✓✗
B
30✓✗
C
40✓✗
D
35✓✗
Explanation
If the sum doubles in 10 years, then (1+r)10 = 2.
For the sum to become 8 times = 23 times, it takes 3 doubling periods.
Time = 3 × 10 = 30 years
Question 4
The time in which a sum of money will double at 6% compound interest, compounded annually, is approximately:
A
10 years✓✗
B
12 years✓✗
C
13 years✓✗
D
14 years✓✗
Explanation
Using the Rule of 72 (a standard approximation for doubling time under compound interest): years to double ≈ 72 / rate = 72 / 6 = 12 years
Question 5
The compound interest on Rs. 8000 for 6 months at 12% p.a. payable quarterly is:
A
Rs. 487.20✓✗
B
Rs. 480✓✗
C
Rs. 380✓✗
D
None of these✓✗
Explanation
Quarterly rate = 12% / 4 = 3%. 6 months = 2 quarters.
Amount = 8000 × (1.03)2 = 8000 × 1.0609 = 8487.20
CI = 8487.20 - 8000 = 487.20
Question 6
On what sum will the difference between the S.I. and C.I. for 3 years at 6% p.a. amount to Rs. 13.77?
A
Rs. 1250✓✗
B
Rs. 1150✓✗
C
Rs. 1320✓✗
D
None✓✗
Explanation
SI for 3 years = 3PR/100 = 0.18P
CI for 3 years = P[(1.06)3 - 1] = P[1.191016 - 1] = 0.191016P
Difference = CI - SI = P(0.191016 - 0.18) = 0.011016P
0.011016P = 13.77
P = 13.770.011016 ≈ 1250
Question 7
The compound interest on Rs. 40,000 at 12% per annum compounded quarterly for 6 months is:
A
Rs. 2,643✓✗
B
Rs. 2,463✓✗
C
Rs. 2,364✓✗
D
Rs. 2,436✓✗
Explanation
Quarterly rate = 3%, number of quarters in 6 months = 2
Amount = 40000 × (1.03)2 = 40000 × 1.0609 = 42,436
CI = 42,436 - 40,000 = Rs. 2,436
Question 8
What is the present value of Rs. 1,000 to be received after two years, compounded annually at 10% interest rate?
A
Rs. 800✓✗
B
Rs. 826✓✗
C
Rs. 836✓✗
D
Rs. 835✓✗
Explanation
PV = 1000 / (1.1)2 = 1000 / 1.21 ≈ Rs. 826
Question 9
Find the effective rate of interest at 10% p.a. when interest is payable quarterly.
A
10.38%✓✗
B
5%✓✗
C
5.04%✓✗
D
4%✓✗
Explanation
Effective rate = (1 + 0.025)4 - 1 = 1.103813 - 1 = 0.103813 ≈ 10.38%
Question 10
Kanta wants to accumulate Rs. 4,91,300 in her savings account after three years. The rate of interest offered by the bank is 6¼% per annum compounded annually. How much amount should she invest today to achieve her target amount?
A
Rs. 4,09,600✓✗
B
Rs. 4,37,500✓✗
C
Rs. 46,900✓✗
D
Rs. 49,600✓✗
Explanation
PV = 4,91,300 / (1.0625)3
(1.0625)3 ≈ 1.19968
PV = 4,91,300 / 1.19968 ≈ Rs. 4,09,600
Question 11
At a certain rate of interest per annum, the difference between the compound interest and simple interest on Rs. 3,00,000 for two years is Rs. 480, then the rate of interest per annum is:
A
2%✓✗
B
4%✓✗
C
6%✓✗
D
8%✓✗
Explanation
For 2 years, CI - SI = P × (R/100)2
480 = 300000 × (R/100)2
(R/100)2 = 480/300000 = 0.0016
R/100 = 0.04, so R = 4%
Question 12
The compound interest on half-yearly rests on Rs. 10,000, the rate for the first and second years being 6% and for the third year 9% p.a., is
A
Rs. 2,200✓✗
B
Rs. 2,287✓✗
C
Rs. 2,285✓✗
D
Rs. 2,290.84✓✗
Explanation
Half-yearly rate for years 1-2 = 3%, for year 3 = 4.5%.
Amount = 10000 × (1.03)4 × (1.045)2
= 10000 × 1.12551 × 1.09203 ≈ 12,290.84
CI = 12,290.84 - 10,000 = Rs. 2,290.84
Question 13
A sum of money invested at compound interest doubles itself in four years. In how many years will it become 32 times of itself at the same rate of compound interest?
A
12 years✓✗
B
16 years✓✗
C
20 years✓✗
D
24 years✓✗
Explanation
If the sum doubles in 4 years, then (1+r)4 = 2.
32 times = 25, so it takes 5 doubling periods.
Time = 5 × 4 = 20 years
Question 14
In how many years will a sum of money double at 5% p.a. compounded annually?
A
15 years 3 months✓✗
B
14 years 2 months✓✗
C
14 years 3 months✓✗
D
15 years 3 months✓✗
Explanation
Solving (1.05)n = 2 for n gives approximately 14 years 2 months (using logarithms: n = log 2 / log 1.05 ≈ 14.2 years).
Question 15
The ratio of principal and the compounded interest value for three years (compounded annually) is 216:127. The rate of interest is:
A
0.1777✓✗
B
0.1567✓✗
C
0.1666✓✗
D
0.1587✓✗
Explanation
Principal : CI = 216 : 127, so Amount (P + CI) : Principal = 343 : 216 = 73 : 63
(1 + r)3 = 343216 = 763
1 + r = 76, so r = 16 ≈ 0.1666
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