# Navigate the interest topic with these practice questions

Published: Published Date - 11:11 PM, Tue - 14 June 22

**Hyderabad:** This article is in continuation to the last article on preparation for the Sub-Inspector of Police recruitment exam. Here are some practice questions and answers along with explanations on the Simple Interest and Compound Interest topic.

**1. A sum of money put at compound interest amount to Rs 672 in two years and to Rs 714 in three years. Then the rate of interest per annum is**

A. 6 % B. 12 % C. 10% D. 5%

**Ans:A**

**Explanation:**

Given that

Difference between interest = (714-672) = 42

In compound interest, the extra amount which is added every year is nothing but interest on interest.

We can clearly say that 42 is interest on 672.

Rate of interest R = 42×100/672 = 6 1/4 %

**2. The difference between the compound interest payable half – yearly and the simple interest on a certain sum lent out at 10% p.a. for one year is Rs 25, then the sum is**

A. Rs 8,000 B. Rs 8,500 C. Rs 9,000 D. Rs 10,000

**Ans: D**

**Explanation:**

Let p = x, r=10%, T = 1

S.I = PTR/100 = X/100

Compound interest = p [(1 R/100)n – 1]

Compounded half yearly means r value will half.

C.I = X [( 1 5/100)2 – 1 ]

41X/400 – X/100 = 25

X =Rs 10000

**3. If the compound interest on a certain sum of money at 5% for three years is Rs 1,261 what is the simple interest?**

A. Rs 1,200 B. Rs 1,250 C. Rs 1,300 D. Rs 1,240

**Ans: A**

**Explanation:**

Given that

C.I = Rs 1261, T=3, R=5%

Compound interest = p [( 1 r /100) n – 1]

p [ (1 5/100)3 – 1] = 1261

P ( 261/8000 ) = 1261 Therefore P= 8000

S.I = 8000 x 5 x 3/100 = Rs 1200

**4. The difference between the compound interest and the simple interest on a certain sum of money for a period of 2 years is Rs 900. If the rate of interest is 15% p.a. then the sum is**

A. Rs 40,000 B. Rs 40,500 C. Rs 45,000 D. Rs 38,000

**Ans: A**

**Explanation:**

We have a formula for difference between the compound interest and simple interest on a certain sum of money for period of 2 years

C.I – S.I = P ( R/100)2

900 = P (15/100) 2

P = Rs 40,000

**5. If the simple interest on a sum of money at 5% per annum for 3 years is Rs 1,200, then the compound interest on the same sum for the same period at the same rate**

A. Rs 1,621 B. Rs 1,261 C. Rs 1,126 D. Rs 2,611

**Ans: B**

**Explanation:**

Given that

R =5%, T=3, S.I=1200

P= 100 x 1200/ 3x 5 = 8000

Amount = P (1 r/100)n

= 8000 (1 5/100)3 = 9261

Then C.I =9261-8000= Rs 1261

**6. Divide Rs 1,301 between A and B, so that the amount of A after 7 years is equal to the amount of B after 9 years, the interest being compounded at 4% per annum then the two parts are**

A. Rs 676 and Rs 625 B. Rs 576 and Rs 725

C. Rs 600 and Rs 701 D. Rs 700 and Rs 601

**Ans: A**

**Explanation:**

Let the two parts be Rs x and Rs (1301-x)

X ( 1 4/100)7 = (1301-x) (1 4/100)9

x/ 1301-x = 26/25 x 26/25

X=Rs 676, Rs 625

**7. A sum of money amounts to Rs 6,690 after 3 years and to Rs 10,035 after 6 years on compound interest, then the sum is**

A. Rs 4,000 B. Rs 4,640 C. Rs 4,460 D. Rs 4,400

**Ans: C**

**Explanation:**

Let the sum be p

p (1 r/100)3 = 6690

p (1 r/100)6 = 10035

By dividing above two we will get

p= Rs 4460

**8. A sum of money doubles itself at compound interest in 15 years. In how many years will it become eight times?**

A. 19 B. 30 C. 35 D. 45

**Ans:D**

**Explanation:**

If the principle= x

Given that sum of money doubles in 15 years i.e., 2x

It will become 8 times when it doubles 3 times.

Then 15×3 = 45

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