Friday, Aug 12, 2022

Navigate the interest topic with these practice questions

By Telangana Today

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

Navigate the interest topic with these practice questions

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