compound interest

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6. 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
E. None of these

Answer: Option C

Explanation:

 

 

Amount
= Rs. 25000 x 1 + 12 3
100
= Rs. 25000 x 28 x 28 x 28
25 25 25
= Rs. 35123.20

C.I. = Rs. (35123.20 – 25000) = Rs. 10123.20
7. 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%

Answer: Option A

Explanation:

 

Let the rate be R% p.a.

 

Then, 1200 x 1 + R 2 = 1348.32
100

 

1 + R 2 = 134832 = 11236
100 120000 10000

 

1 + R 2 = 106 2
100 100

 

1 + R = 106
100 100

R = 6%
8. 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

Answer: Option B

Explanation:

 

 

P 1 + 20 n > 2P     6 n > 2.
100 5

 

Now, 6 x 6 x 6 x 6 > 2.
5 5 5 5

So, n = 4 years.
9. 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

Answer: Option C

Explanation:

 

Amount
= Rs. 8000 x 1 + 5 2
100
= Rs. 8000 x 21 x 21
20 20
= Rs. 8820.
10. 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%

Answer: Option D

Explanation:

 

 

Amount of Rs. 100 for 1 year
when compounded half-yearly		 = Rs. 100 x 1 + 3 2 = Rs. 106.09
100

Effective rate = (106.09 – 100)% = 6.09%
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