BANK & INSURANCE (SIMPLE AND COMPOUND INTEREST) PART 1

Total Questions: 60

1. The simple interest accrued on an amount of Rs. 40,000 at the end of 3 years is Rs. 33,600. What would be the compound interest accrued on the same amount at the same rate in the same period?

Correct Answer: (b) Rs. 43886.08
Solution:Let the rate of interest be r.

Therefore, (40000 x r x 3)/100 = 33600 solving we get r = 28%.

So, the compound interest = 40000 ((1+28/100)(1+28/100)(1+28/100)) - 40000

= Rs. 43886.08. Hence, option b

2. A certain sum of money amounts to Rs 1008 in 2 years and to Rs 1164 in 3.5 years. Find the rate of interest.

Correct Answer: (b) 13%  
Solution:S.I. for 1½ years = Rs (1164 - 1008) = Rs 156.
S.I. for 2 years = Rs (156 x 2/3 x 2) = Rs 208.
Principal = Rs (1008 - 208) = Rs 800.
Now, P = 800, T = 2 and S.I. = 208.
Rate = (100 x S.I.) / (P x T) = [(100 x 208) / (800 x 2)]% = 13%. Hence, option b

3. Rs. 6,000 is invested at 10% p.a. on simple interest. If that interest is added to the principal after every 20 years, the amount will become Rs. 28,000 after :

Correct Answer: (c) 25.55 years  
Solution:S.I. of 20 years = 6000 x 10% x 20 = 12000
Principal after 20 years becomes = 6000 + 12000 = 18000
S.I. on it = 28000 - 18000 = 10000
Time involved = 10000 / (10% x 18000) = 5.55 years
Total time = 20 + 5.55 years = 25.55 years. Hence, option c

4. The simple interest accrued on a sum of certain principal is Rs. 2,000 in five years at the rate of 4 p.a. What would be the compound interest accrued on same principal at same rate in two years?

Correct Answer: (d) Rs. 816  
Solution:

Let the principal amount be Rs. Y
(Y x 4 x 5)/100 = 2000, so Y = 10000
Required solution = 10000 (1.04)² - 10000 = 816.
Hence, option d

5. Rs. 6000 was lent partly @ 5% and partly @ 7% simple interest. The total interest received after 4 years is Rs. 1600. What is the amount lent @ 5% SI?

Correct Answer: (d) Rs. 1000  
Solution:

Let the amount lent at 5% be x and at 7% be (6000 - x), so
(x x 5 x 4)/100 + ((6000 - x) x 7 x 4)/100 = Rs. 1600. After Solving, we get x = 1000. Hence, option d

6. The difference between compound interest, compounded annually and simple interest at the end of two years on Rs. 6,40,000 is Rs. 14,400. What is the simple interest for the first year?

Correct Answer: (a) Rs. 96,000  
Solution:

In the first year the compound interest and the simple interest would be the same. Now, the additional interest in the second year in the case of amount being compounded would be on the account of interest on first year’s interest
Therefore, 64000 x R/100 = 14400
64R² = 14400
R² = 225
R = 15%
So, simple interest in 1st year = 640000 x 0.15 = Rs. 96,000. Hence, option a

7. Two equal sums of money were lent at simple interest at 11% p.a. for 3.5 years and 4.5 years respectively. If the difference in interest for two periods was Rs. 412.50, then each sum is

Correct Answer: (c) Rs. 3750
Solution:Let each sum be Rs. x.
Then, (x x 11 x 9) / (100 x 2) – (x x 11 x 7) / (100 x 2) = 412.50
99x - 77x = 82500
x = 3750. Hence, option c

8. Rohtash earns an interest of Rs. 300 over 2 years on a simple interest basis and Rs. 315 at the same interest rate on compound interest basis. What is the compound interest for 2nd year?

Correct Answer: (d) Rs. 165  
Solution:Simple interest earn in 2 year = 300 so simple interest earn in one year = 150
also compound interest earn on first will be same as simple interest i.e. = 150.
CI for second year = 315 - 150 = 165
Hence, option d

9. A sum of money invested at simple interest rate, becomes thrice of its original value in 8 years, then in how many years will it become seven times of its original value at the same rate of interest?

Correct Answer: (b) 24 years  
Solution:

In 8 years, the interest earned = 200%
Thus, per year interest rate = 200/8 = 25%
To become 7 times we need a 600% interest earned
Therefore, required time = 600/25 = 24 years.
Hence, it will be take 24 years to become 7 times itself at the same rate of interest.
Hence, option b

10. The simple interest on a certain principal for a time period of 4 years at 8% p.a. is Rs. 1280. If the same principal is invested at 10% p.a. compound interest compounded annually, what will be the amount after 2 years?

Correct Answer: (d) Rs. 4840  
Solution:

Time = 4 years and Rate = 8% p.a.
Hence 1280 = p x 4 x 8/100.
Thus p = 128000/32 = Rs.4000.
Now for compound interest, p = 10% p.a compounded annually and n = 2 years
Amount after compound interest = p x (1+(r/100))ⁿ
Hence amount = 4000 (1+(10/100))² = 4000 x (1.1)² = 4000 x 1.21 = Rs.4840
Hence the amount is Rs.4840.
Hence option d