Compound Interest Questions with Detailed Explanations

compund interest

Ques 1.

Population of a city is 198000. It increased by 7% in the Ist year and decreased by 5% in the IInd year. What is the population of the city in third year.
(a) 218900
(b) 201267

(c) 201860
(d) 212453

Ques 2.

What will be the difference in annual simple and compound interests at the rate of 12%p.a on the sum Rs. 960 after 2 years  compounded annually? (Very important)
(a) Rs. 13.824
(b) Rs. 20.224
(c) Rs. 24.04
(d) Rs. 31

Ques 3.

If  rate of interest is 4% compounded quarterly. What will be the amount if a man invests Rs. 2000 for 1 year  ?
(a) Rs. 2060
(b) Rs. 2081.21
(c) Rs. 2100.25
(d) Rs. 2125.54

Ques 4.

A bank offers 5% interest compounded half yearly. 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 the way of interest is :
(a) Rs. 123
(b) Rs, 122
(C) Rs. 121
(d) Rs. 120

Ques 5.

An amount increased by 60% in years at simple interest. What will be the compound interest of Rs. 12000 after 3 years at the same rate ?
(a) Rs. 6240
(b) Rs. 3972
(c) Rs. 3120
(d) Rs. 2160

Ques 6.

If a sum of money is borrowed and returned in equal installments of Rs.882. Find the sum borrowed : (Very important)
(a) Rs. 1700
(b) Rs. 1680
(c) Rs. 1640
(d) Rs.1620

Ques 7. 

In how many years a sum of money will be doubled if interest rate is 20% compounded annually.
(a) 6
(b) 5
(c) 4
(d) 3

Ques 8. 

Nominal rate of compound interest is 6%per annum paid half yearly. Find effective rate of interest :
(a) Rs. 6.09%
(b) Rs. 6.08%
(c) Rs. 6.07%
(d) Rs. 6.06%

Solutions :

Ans 1.
compund interest

Ans 2.
compund interest solution
Ans 3.
compound interest solution

Ans 4.
.compound interest solution 1
Hence, required interest = 3321 - 3200 = Rs. 121

Ans  5.
compound interest solution  2
Ans 6.
compound interest solution

Ans 7.
compound interest solution
            So, n = 4 years

Ans 8.
compound interest solution
     Hence , C.I = 106 .09 - 100 = Rs. 6.09
     So, required effective rate = 6.09% p.a.




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