Compound Interest is one of the most important topics in Quantitative Aptitude for banking exams such as IBPS PO, SBI PO, IBPS Clerk, RRB Clerk, RRB Officer Scale 1, and LIC Assistant. Questions from this topic are frequently asked in both prelims and mains examinations because of their practical relevance in banking, loans, savings, and investments.
What is Compound Interest?
Compound Interest is a key concept in mathematics where interest is calculated not only on the original principal amount but also on the accumulated interest over time. It plays an important role in areas such as banking, investments, savings, and loans.
Since this topic is widely used in financial calculations, understanding its concepts and solving related questions can help students improve both their mathematical skills and practical knowledge.
Below are some situations where we can use the formula of CI to calculate the required results.
- Increase or decrease in population
- The growth of a bacteria (when the rate of growth is known)
- The value of an item, if its price increases or decreases in the intermediate years
Formula of Compound Interest?
Interest is the additional money paid by organisations like banks or post offices on money deposited (kept) with them. Interest is also paid by people when they borrow money. When the interest is calculated on the previous year’s amount, the interest is called compounded or Compound Interest (C.I.).
The formula for finding the amount on compound interest is given by:
A = P[1 +(R/100)]n
This is the amount when interest is compounded annually.
Compound interest (CI) = A – P
Compound Interest Questions and Answers
Question 1: A bank offers 5% compound interest calculated on half-yearly basis. A customer deposits Rs. 1600 each on 1st January and 1st July of a year. At the end of the year, the amount he would have gained by way of interest is:
A Rs. 120
B Rs. 121
C Rs. 122
D Rs. 123
Question 2: The difference between simple and compound interests compounded annually on a certain sum of money for 2 years at 4% per annum is Re. 1. The sum (in Rs.) is:
A. 625
B. 630
C. 640
D. 650
Question 3: There is 60% increase in an amount in 6 years at simple interest. What will be the compound interest of Rs. 12,000 after 3 years at the same rate?
A. Rs. 2160
B. Rs. 3120
C. Rs. 3972
D. Rs. 6240
Question 4: What is the difference between the compound interests on Rs. 5000 for 1 years at 4% per annum compounded yearly and half-yearly?
A. Rs. 2.04
B. Rs. 3.06
C. Rs. 4.80
D. Rs. 8.30
Question 5: What will be the compound interest on a sum of Rs. 25,000 after 3 years at the rate of 12 p.c.p.a.?
A. Rs. 9000.30
B. Rs. 9720
C. Rs. 10123.20
D. Rs. 10483.20
Question 6: At what rate of compound interest per annum will a sum of Rs. 1200 become Rs. 1348.32 in 2 years?
A. 6%
B. 6.5%
C. 7%
D. 7.5%
Question 7: The least number of complete years in which a sum of money put out at 20% compound interest will be more than doubled is:
A. 3
B. 4
C. 5
D. 6
Question 8: Albert invested an amount of Rs. 8000 in a fixed deposit scheme for 2 years at compound interest rate 5 p.c.p.a. How much amount will Albert get on maturity of the fixed deposit?
A. Rs. 8600
B. Rs. 8620
C. Rs. 8820
D. None of these
Question 9: The effective annual rate of interest corresponding to a nominal rate of 6% per annum payable half-yearly is:
A. 6.06%
B. 6.07%
C. 6.08%
D. 6.09%
Question 10: At what rate of compound interest per annum, a sum of Rs. 1200 becomes Rs. 1348.32 in 2 years?
A .6%
B. 7%
C 8%
D 9%
Question 11: Rahul invested a certain amount in three different schemes A, B, and C with the rate of interest 10% p.a., 12% p.a. and 15% p.a. respectively. If the total interest accrued in one year was Rs. 3200 and the amount invested in Scheme C was 150% of the amount invested in Scheme A and 240% of the amount invested in Scheme B, what was the amount invested in Scheme B?
A. Rs 5000
B. Rs 6500
C. Rs 8000
D. Rs 10000
Question 12: If a sum of Rs.8000 lended for 20% per annum at compound interest then the sum of the amount will be Rs.13824 in:
A. 2 years
B. 1 year
C. 3 years
D. 4 years
Question 13: Find the compound interest on a principal amount of Rs.5000 after 2 years, if the rate of interest for the 1st year is 2% and for the 2nd year is 4%.
A Rs.304
B. Rs.314
C. Rs.324
D. Rs.334
Question 14: What sum(principal) will be amount to Rs.34536.39 at compound interest in 3 years, the rate of interest for 1st, 2nd and 3rd year being 5%, 6% and 7% respectively?
A. Rs.25576
B. Rs.29000
C. Rs.28012
D. Rs.24000
Question 15: What will be the amount if sum of Rs.10,00,000 is invested at compound interest for 3 years with rate of interest 11%, 12% and 13% respectively?
A. Rs.14,04,816
B. Rs.12,14,816
C. Rs.11,35,816
D. Rs.16,00,816
Question 16: Compound interest is the adding of interest to the principal sum of a loan or deposit. It is the outcome of reinvesting interest rather than paying it out, so that interest is received on the principal plus previously collected interest in the next period.
A. 10
B. 15
C. 12
D. 8
Question 17: The difference between the compound interest and the simple interest on a sum for two years at 10% pa, when the interest is compounded yearly, is Rs 400. If the interest is compounded half-yearly, what will be the difference between the CI and the SI ?
A. Rs 400
B. Rs 525.50
C. Rs 620.25
D. Rs 640.50
Question 18: A and B each borrowed equal sums for 3 years at the rate of 5% simple and compound interest respectively. At the time of repayment B has to pay Rs. 76.25 more than A. The sum borrowed and the interest paid by A (in Rs.) is:
A. Rs. 10,000, Rs. 1,500
B. Rs. 11,000, Rs. 1,100
C. Rs. 10,000, Rs. 1,400
D. Rs. 9,000, Rs. 200
Question 19: A man borrows Rs. 6000 at 10% compound rate of interest. He pays back Rs. 2000 at the end of each year to clear his debt. The amount that he should pay to clear all his dues at the end of third year is:
A. Rs. 6000
B. Rs. 3366
C. Rs. 3060
D. Rs. 3066
Question 20: Rohit took a loan of Rs. 20000 to purchase one LCD TV set from a finance company. He promised to make the payment after three years. The company charges compound interest at the rate of 10% per annum for the same. But suddenly the company announces the rate of interest as 15% per annum for the last one year of the loan period. What extra amount does Rohit have to pay due to this announcement of the new rate of interest ?
A. Rs. 7830
B. Rs. 4410
C. Rs. 6620
D. Rs. 1210
Q21. A sum becomes 1.6 times of itself in five years at simple rate of interest. Find rate of interest per annum?
(a) 10%
(b) 12.5%
(c) 15%
(d) 12%
(e) 8.5%
Q22. A sum is invested for 2 years with 20% rate on S.I. and the same sum invested for 2 years at 20% rate at C.I. If difference between interest earned in both scheme is Rs.160 then find the sum invested?
(a) Rs.2500
(b) Rs.1600
(c) Rs.1800
(d) Rs.2000
(e) Rs.4000
Q23. A man invested Rs.X at 15% p.a. at SI for 4 years and Rs.(1.35X) at 18% p.a. at SI for 3 years. If total interest received by man is Rs.15948, then find value of Rs.(3.12X).
(a) Rs.50544
(b) Rs.42764
(c) Rs.32580
(d) Rs.47372
(e) Rs.37440
Q24. A man received Rs.3456 when he invested Rs.P at 12% p.a. at SI for 3 years. If he invested Rs.(P + 4400) at 15% p.a. at CI compounding annually for 2 years, then find the interest received by him.
(a) Rs.4515
(b) Rs.4960
(c) Rs.4725
(d) Rs.4185
(e) Rs.4345
Q25. A man invested an amount in two schemes in the ratio of 2 : 3 at the rate of 20% p.a. and 10% p.a. on compound interest respectively. If the man gets a total interest of Rs. 1208 after two years from both the schemes, the find amount invested by man?
(a) 6000 Rs.
(b) 4800 Rs.
(c) 5000 Rs.
(d) 4500 Rs.
(e) 4000 Rs.
Q26. If a man invests equal sum at the same rate of interest on simple interest for T and T+4 years and the respective ratio of interest gets by man is 1:2 respectively, then find ‘T’?
(a) 6
(b) 2
(c) 5
(d) 3
(e) 4
Q27. A borrowed Rs. P from B at 20% p.a. on compound interest annually. If A paid total amount of Rs.34,560 to B for settle his debt after three years, then find value of P?
(a) 16,000
(b) 24,000
(c) 20,000
(d) 15,000
(e) 25,000
Q28. The difference of the interest received when a sum is invested at 15% p.a. at SI for two years and the interest received when that sum is invested at 20% p.a. for one year compounded half yearly is Rs 432, find the sum?
(a) Rs. 5400
(b) Rs. 5000
(c) Rs. 4500
(d) Rs. 4000
(e) Rs. 4800
Q29. A and B invested same amount in two different schemes on simple interest for five years. A invested at the rate of 12% p.a. and B invested at the rate of 18% p.a. If difference between interest received by A and B is Rs. 1440, then find the total amount invested by A and B together.
(a) Rs. 5400
(b) Rs. 9000
(c) Rs. 4800
(d) Rs. 9600
(e) Rs. 4500
Q30. A man invested Rs. 4000 on simple interest at certain rate of interest for some years. If rate of interest is two times of the time for man invested and he received Rs. 2880 as interest, then find the rate of interest.
(a) 20%
(b) 15%
(c) 9%
(d) 6%
(e) 12%
| Answer |
| Q1 |
B |
Q2 |
A |
Q3 |
C |
Q4 |
A |
Q5 |
C |
| Q6 |
A |
Q7 |
B |
Q8 |
C |
Q9 |
D |
Q10 |
A |
| Q11 |
A |
Q12 |
C |
Q13 |
B |
Q14 |
A |
Q15 |
C |
| Q16 |
C |
Q17 |
D |
Q18 |
A |
Q19 |
B |
Q20 |
D |
| Q21 |
D |
Q22 |
E |
Q23 |
E |
Q24 |
A |
Q25 |
E |
| Q26 |
E |
Q27 |
C |
Q28 |
E |
Q29 |
D |
Q30 |
E |
