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### Question 1

How much interest does an amount of Rs. 1000000 earn @4% compounded annually for 3 years?

### Question 2

The difference in compound interest(annual compounding) and simple interest for a period of 2 years is Rs. 54. What is the principal amount if the rate is 3% p.a.?

**A**

Rs. 60000.

**B**

Rs. 70000.

**C**

Rs. 50000.

**D**

Rs. 80000.

**Soln.**

**Ans: a**

The shortcut formula for the difference between compound and simple interest over a period of 2 years is $Difference = Principal × (\text"rate"/100)^2$. So Principal = $(Difference × 10000)/(rate × rate)$ = $(54 × 10000)/(3 × 3)$ = Rs. 60000.

### Question 3

An amount P is invested for 2 years @6% p.a. The simple interest is Rs. 6000. What would be the compound interest on the same amount, at the same rate and for the same time, compounded annually?

**A**

Rs. 6180.

**B**

Rs. 6280.

**C**

Rs. 6080.

**D**

Rs. 6380.

**Soln.**

**Ans: a**

Let SI, P, r, t have usual meanings. Then, for 2 years, SI = (P × r × 2)/100. So P = $(50 × SI)/r$. The compound interest for 2 years by shortcut formula is ${P × r × (200 + r)}/10000$. Putting P here, it becomes, ${{(50 × SI)/r} × r × (200 + r)}/10000$ = ${SI × (r + 200)}/200$ = ${6000 × (6 + 200)}/200$ = Rs. 6180.

### Question 4

An amount P is invested for 1 year @3% p.a. The simple interest is Rs. 6000. What would be the compound interest on the same amount, at the same rate and for the same time, compounded annually?

### Question 5

The difference in compound interest(annual compounding) and simple interest for a period of 2 years is Rs. 98. What is the principal amount if the rate is 7% p.a.?

**A**

Rs. 20000.

**B**

Rs. 30000.

**C**

Rs. 25000.

**D**

Rs. 40000.

**Soln.**

**Ans: a**

The shortcut formula for the difference between compound and simple interest over a period of 2 years is $Difference = Principal × (\text"rate"/100)^2$. So Principal = $(Difference × 10000)/(rate × rate)$ = $(98 × 10000)/(7 × 7)$ = Rs. 20000.

This Blog Post/Article "Compound Interest Quiz Set 005" by Parveen (Hoven) is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.

Updated on 2020-02-07. Published on: 2016-04-30