COMPOUND INTEREST

Q/QA - COMP_INT
Important Point / Facts EXERCISE - I
1. Let Principal Rs. P. 1. The difference between the compound interest and the
Time = n years and Rate = R% p.a. simple interest on a certain sum at 5% per annum for 2
years is Rs. 1.50 The sum is –
Case I. When interest is compounded annually
(A) Rs. 600 (B) Rs. 500
n
 R  (C) Rs. 400 (D) Rs. 300
Amount = P 1  
 100 
2. If the compound interest on a certain sum for 2 years at
Case II. When interest is come pounded half yearly 12.5% per annum is Rs. 170, the simple interest is –
 1 
2n
(A) Rs. 150 (B) Rs. 152.50
 R 
Amount = P 1  2  (C) Rs. 160 (D) Rs. 162.50
 100 

  3. The simple interest on a certain sum for 2 years at 10% per
Case III When interest is compounded quarterly annum is Rs. 90. The corresponding compound interest is –
4n
(A) Rs. 99 (B) Rs. 95.60
 1 
 R  (C) Rs. 94.50 (D) Rs. 108
P 1  4 
Amount =  100  4. At what rate of compound interest per annum will a sum of

 
Rs. 1200 become Rs. 1348.32 in 2 years?
1 (A) 7% (B) 7.5% (C) 6% (D) 6.5%
Case IV. When time is fraction of a year, say 3 years, then
5
5. The difference of compound interest on Rs. 800 for 1 year
 1  at 20% per annum when compound half yearly and quarterly
3  R 
 R  is –
  1  5 
Amount = P  1  100   100 
  (A) Nil (B) Rs. 2.50
 

Case V. When rate interest is R1%, R2% and R3% for 1st (C) Rs. 4.40 (D) Rs. 6.60
year, 2nd year and 3rd year respectively, then 6. The difference between simple interest and the compound
interest on Rs. 600 for 1 year at 10% per annum, reckoned
 R1   R   R 
Amount = P  1  100    1  1002    1  1003  half yearly is –
     
(A) Nil (B) Rs. 6.60
2. Present worth of a sum of Rs. x due n years hence is
(C) Rs. 4.40 (D) Rs. 1.50
given by –
1
x 7. The compound interest of Rs. 20480 at 6 % per annum
4
n
Present worth =  1  R  for 2 years 73 days is –
 100  (A) Rs. 3000 (B) 3131
(C) Rs. 2929 (D) Rs. 3636
8. The value of a machine depreciates every year at the rate of
10% on its value at the beginning of that year. If the present
value of the machine is Rs. 729, its worth 3 years ago was –
(A) Rs. 947.10 (B) Rs. 800
(C) Rs. 1000 (D) Rs. 750.87

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 COMPOUND INTEREST
Q/QA - COMP_INT

1 5. Simple interest on a sum at 4% per annum for 2 years is

9. A tree increase annually by 8
th of its height. By how much Rs. 80. The compound interest on the same sum for the
will it increase after 2 years, if it stands today 64 cm high? same period is –
(A) 72 cm (B) 74 cm (C)75 cm (D) 81 cm (A) Rs. 81.60 (B) Rs. 160
1 (C) Rs. 1081.60 (D) None of these
10. A man borrows Rs. 4000 from a bank at 7
2
% compound
6. If Rs. 7500 are borrowed at compound interest at the rate
interest. At the end of every he pays Rs 1500 as part of 4% per annum , then after 2 years the amount to be paid
repayment of loan and interest. How much does he still owe is –
to the bank after three such installments
(A) Rs. 8082 (B) Rs. 7800
(A) Rs. 123.25 (B) Rs. 125
(C) Rs. 8100 (D) Rs. 8112
(C) Rs. 400 (D) Rs. 469.18
7. The compound interest on a sum for 2 years is Rs. 832 and
11. A sum amounts to Rs. 2916 in 2 years and to Rs. 3149.29 in the simple interest on the same sum for the same period is
3 years at compound interest. The sum is – Rs. 800. The difference between the compound and simple
(A) Rs. 1500 (B) Rs. 2000 interest for 3 years will be –
(C) Rs. 2500 (D) Rs. 3000 (A) Rs. 48 (B) Rs. 66.56
12. Divided Rs. 3903 between A and B, so that A’s share at the (C) Rs. 98.56 (D) None of these
end of 7 years may equal to B’s share at the end of 9 years, 8. The difference in compound interest and simple interest
compound interest being at 4 per cent. for 2 years on a sum of money is Rs. 160. If the simple
(A) Rs. 2028, Rs. 1875 (B) Rs. 2018, Rs. 1885 interest for 2 years be Rs. 2880, the rate per cent is –
(C) Rs. 2008, Rs. 1895 (D) Rs. 2038, Rs. 1865 5 1 1
EXERCISE - II (A) 5 % (B) 12 % (C) 11 9 % (D) 9 %
9 2
1. What is the principal amount which earns Rs.132 as 9. The last number of complete years in which a sum of money
compound interest for the second year at 10% per annum? put out at 20% compound interest will be more than
(A) Rs. 1000 (B) Rs. 1200 doubled is –
(C) Rs. 1320 (D) None (A) 3 years (B) 4 years
2. A sum amount to Rs. 1352 in 2 years at 4% compound (C) 5 years (D) 6 years
interest. The sum is – 10. A sum of Rs. 550 was taken as a loan. This is to be repaid
(A) Rs. 1300 (B) Rs. 1250 in two equal annual installments. If the rate of interest be
(C) Rs. 1260 (D) Rs. 1200 20% compounded annually then the value of each
installment is
3. the compound interest on Rs. 30000 at 7% per annum for a
certain time is Rs. 4347. The time is – (A) Rs. 421 (B) Rs. 396
(C) Rs. 360 (D) Rs. 350
1
(A) 2 years (B) 2 2 years 11. A loan was repaid in two annual instalments of Rs. 121
(C) 3 years (D) 4 years each. If the rate of interest be 10% per annum.
Compounded annually, the sum borrowed was –
4. Rs. 800 at 5% per annum compound interest will amount to
Rs. 882 in – (A) Rs. 200 (B) Rs. 210
(A) 1 year (B) 2 years (C) Rs. 217.80 (D) Rs. 280
(C) 3 years (D) 4 years 12. A sum of money placed at compound interest doubles itself
in 5 years. It will amount to eight times itself in –

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 COMPOUND INTEREST
Q/QA - COMP_INT
(A) 15 years (B) 20 years EXERCISE - I
(C) 12 years (D) 10 years 1.(A) 2.(C) 3.(C) 4.(C) 5.(C) 6.(D)
13. A sum invested at compound interest payable annually. The 7.(C) 8.(C) 9.(D) 10.(A) 11.(C) 12.(A)
interest in two successive years was Rs. 500 and Rs. 540. EXERCISE - II (ANSWER)
The sum is –
1.(B) Let x be the principal at the end of first year
(A) Rs. 3750 (B) Rs. 5000
x  10  1
(C) Rs. 5600 (D) Rs. 6250 Then  132
100
14. A sum of money becomes Rs. 6690 after three years and
Rs. 10035 after six years on compound interest. The sum is  x =1320
– Let y be the original principal
(A) Rs. 4400 (B) Rs. 4445 y  10  1
(C) Rs. 4460 (D) Rs. 4520 Then, y + = 1320
100
15. A sum of money put out at compound interest amounts in 2
years to Rs. 578.40 and in 3 years to Rs. 614. 55. Find the
 y = 1200
rate of Interest. 2.(B) Let the sum be P. Then,
1 1 3 2
(A) 6% (B) 6 4 % (C) 6 % (D) 6 4 %  4 
2 1352 = P  1  
 100 
16. Find what is that first year in which a sum of money will
become more than double in amount if put out at compound 26 26
 1352 = P  
interest at the rate of 10% per annum. 25 25
(A) 6th year (B) 7th year 1352  25  25
(C) 8th year (D) Data inadequate  P =
26  26
= 1250
17. What will be the compound interest of Rs. 8000 at 10%  Principal = Rs. 1250
1
p.a. for 1 years. When compound interest is payable half
2
t
 7 
yearly ? 
3.(A)  30000  1   = 30000 + 4347
 100 
(A) Rs. 1261 (B) Rs. 1385
t
(C) Rs. 1480 (D) Rs. 1255  107  34347
   =
18. Neeraj saves Rs. 400 at the end of each year and lends this  100  30000
saving at 5% p.a. compound interest. How much will it worth
2
at the end of 3 years? 11449  107 
= = 
(A) Rs.1312.50 (B) Rs. 1284 10000  100 
(C) Rs.1315 (D) Rs. 1324.05  Time = 2 years
4.(B) Let time be t years
t
 5 
 882 = 800  1  
 100 

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 COMPOUND INTEREST
Q/QA - COMP_INT

882
t  100  160 
 21  Hence,  Rate per cent = %
 =   1440  1 
800  20 
 100 
2 t =  9 %
 21   21   
   = 
 20   20  1
= 11 %
 t =2 9
 Time = 2 years n
 20 
9.(B)  x 1   > 2x
 100 
 100  80 
5.(A) Principal = Rs.   = Rs. 1000 n
 4 2  6
   >2
2
5
   4   
 C.I. = Rs.  1000   1  100   1000   6 6 6 6
      Now,      >2
5 5 5 5
= Rs. 81.60
1296
 4  
2  615
>2

6.(D) Amount = Rs.  7500  1   
  100  
 n = 4 years
 26 26 
= Rs.  7500  25  25 
 
10.(C) Let the value of each installment be Rs. x
= Rs. 8112
7.(C) S.I. for first year = Rs. 400  
 
S.I. on Rs. 400 for 1 year = Rs. 32  x x 
  2 
Then,  20  20   = 550
 1   1 
 100  32    100   
100  
Rate =   = 8%
 400  1 
Hence, the difference for 3rd year is S.I. on Rs. 832 5 x 25 x
  = 550
6 36
 8 
= Rs.  832   55x
 100 
 36
= 550
= Rs. 66.56
 x = 360
 Total difference = Rs. (32+66.56)
= Rs. 98.56 11.(B) Principal = (P.W. of Rs. 121 due 1 year hence) + (P.W.
of Rs. 121 due 2 years hence)
8.(C)  S.I. for 1 year = Rs. 1440
 S.I. on Rs. 1440 for 1 year = Rs. 160

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 COMPOUND INTEREST
Q/QA - COMP_INT

3
   R  10035 3

121 121
  1   = =
   100  6690 2
  2 
= Rs.   1  10   10  
 1  
  100   100   3
 P = 6690
2
= Rs. 210
12.(A) Let the principal be P and rate be r%. Then  2
 P =  6690   = Rs. 4460
 3
5
 r 
2P = P  1   15.(B) Clearly the difference between Rs. 578.40 and Rs.
 100  614.55 is the interest on Rs. 578.40 for 1 year.
r 
5 Interest on Rs. 578.40 for 1 year

 1   =2 = Rs. 614.55 – Rs. 578.40
 100 
= Rs. 36.15
Let it be 8 times in t years, then
t
 Interest on Rs. 100 for 1 year
 r 
 8P = P  1 


100  = Rs. 36.15 
100
578 . 40
t 15
1  r   r  3615 100
   = 8  (2)3   1   = Rs. 
 100   100 
57840 1
t = 15 years = 6.25
13.(D) S.I. on Rs. 500 for 1 year = 540 - 500
1
= Rs. 40 = Rs. 6
4
 100  40  1
 Rate =   = 8%  The required rate is 6 per cent
 500  1  4
t
 100  500   10 
Sum = Rs.  
16.(C) Here P 1   > 2P
 81 
 100 
= Rs. 6250
t
14.(C) Let the principal be P, then  11 
   >2
3  10 
 R 
P 1   = 6690 … (i)
 100   11 
8

When t = 8    = 2.14358
R 
6  10 

and P =  1   = 10,035 … (ii)
 100  7
 11 
Now, Dividing (ii) by (i), we get t = 7    = 1.9487
 10 
11  11  11  11  11  11  11  11
By trial, >2
10  10  10  10  10  10  10  10

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 COMPOUND INTEREST
Q/QA - COMP_INT

Hence, the first year in which sum of money will become 18.(D) Amount after 3 years
more than double in amount is 8th year. 3 2
 5   5   5 
17.(A) Yearly interest = 10% = 4001    4001    4001  
 100   100   100 
Half yearly interest = 5%
3 2
1  5   5   5  
Time =1 year = 400  1  100    1  100    1  100   1 
2       
3
=  2 half yearly  105    105 
2
 105  
2 = 400  100       1
   100   100  
= 3 half yearly
2
 5 
3
 21   21   21  
Amount = 8000 1   = 400        1
 100   20   20   20  

3
 21   441 21 
= 8000   = 420    1
 20   400 20 

21 21 21  441  420  400 

= 8000    = 420  
20 20 20  400 
= Rs. 9261
 1261 
Compound interest = Amount – Principal = 420  
 400 
= 9261-8000
= Rs. 1324.05
= Rs. 1261

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