# Simple and Compound Interest Questions and Answers

Simple Interest and Compound Interest Multiple Choice Questions and Answers:

A man borrows \$4000 at 8% per annum on compound interest. At the end of every year, he pays \$1500 as part payment of the loan and interest. How much does he still owe to the bank after 3 such annual payments?
(a) 1,799
(b) 169.25
(c) 2,000
(d) 234.13

Ans. (b)

If the amounts for a fixed principal after 3 and 2 years at a certain rate of compound interest are in the ratio 21 : 20. The rate of interest is
(a) 7%
(b) 6%
(c) 5%
(d) 4%

Ans. (c)

A man invested 1/3rd of the sum at 7%, 1/4th at 8% and the remaining at 10% for one year. If the annual interest is 408, then the investment is
(a) 8,400
(b) 4,800
(c) 5,000
(d) 7,200

Ans. (b)

Calculate the amount at 4480 at 8% per annum for 3 years.
(a) 5842.90
(b) 6000
(c) 5555.20
(d) 5600

Ans. (c)

Find the compound interest on 12000 for 3 years at 10% per annum compounded annually.
(a) 3972
(b) 3872
(c) 3772
(d) 3672

Ans. (a)

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The cost of a machine is estimated to be decreasing at the rate of 15% every year. If it costs 6,000 now, what will be the estimated value of the machine after 2 years?
(a) 3,750
(b) 4,335
(c) 3,225
(d) 5,000

Ans. (b)

Mr. Yogendra gave some money at simple interest and, at the end of 10 years, got back twice the sum. The rate percent per annum is:
(a) 2%
(b) 4%
(c) 5%
(d) 10%

Ans. (d)

The compound interest on 2500 at the rate of 6% p.a. after 2 years will be
(a) 309
(b) 318
(c) 320
(d) 322

Ans. (a)

What annual installment will discharge a depth of 2710 due in 4 years at 7% simple interest?
(a) 1000
(b) 225
(c) 500
(d) 150

Ans. (c)

Simple Interest on 1500 at 7% per annum for a certain time is 210. Find the time.
(a) 2 years
(b) 1.5 years
(c) 2.8 years
(d) 3 years

Ans. (a)

Sarvesh borrowed 5,000 from Arun with simple interest. After 2 years, Arun got 1,000 more than what he had given to Sarvesh. What was the percentage of interest per annum?
(a) 10
(b) 20
(c) 15
(d) 5

Ans. (a)

If the compound interest on a certain sum of money for 2 Â½ years at 5% per annum be 104.05, what would be the simple interest?
(a) 215.75
(b) 125.75
(c) 100
(d) 225

Ans. (c)

What annual installment will discharge a depth of 2710 due in 4 years at 7% simple interest?
(a) 1000
(b) 225
(c) 500
(d) 150

Ans. (c)

Find the compound interest on 6400 for 2 years, compounded annually at 7.5% per annum.
(a) 1000
(b) 996
(c) 1006
(d) None of these

Ans. (b)

A certain sum of money at simple interest amounts to 1260 in 2 years and to 1350 in 5 years. The rate percent per annum is ___
(a) 2 years
(b) 2.5 years
(c) 3 years
(d) 3.5 years

Ans. (b)

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Sarvesh borrowed 5,000 from Arun with simple interest. After 2 years, Arun got 1,000 more than what he had given to Sarvesh. What was the percentage of interest per annum?
(a) 10
(b) 20
(c) 15
(d) 5

Ans. (a)

A sum of money doubles itself at compound interest in 15 years. It will become 8 times in
(a) 40 years
(b) 30 years
(c) 60 years
(d) 45 years

Ans. (d)

A certain sum lent out at simple interest and the true discount on a certain sum for 1 year at 5% is 1 find the sum.
(a) 400
(b) 420
(c) 450
(d) 500

Ans. (b)

If the compound interest on a certain sum of money for 2 Â½ years at 5% per annum be 104.05, what would be the simple interest?
(a) 215.75
(b) 125.75
(c) 100
(d) 225

Ans. (c)

Abhinav invested 1/3 of his capital at 7%, 1/4 at 8% and the remainder at 10%. If his annual income is 561, the capital is ___
(a) 5600
(b) 6200
(c) 6400
(d) 6600

Ans. (d)

Ram borrowed 5,000 from Sanjay with simple interest. After 2 years, Sanjay got 1,000 more than what he had given to Ram. What was the percentage of interest per annum?
(a) 10
(b) 20
(c) 15
(d) 5

Ans. (a)

Find the compound interest on 8000 for 3 years at 5% per annum.
(a) 1451
(b) 1381
(c) 1261
(d) 1151

Ans. (c)

At what rate per annum will a sum of 2000 amount to 2205 in 2 years, compounded annually?
(a) 5%
(b) 10%
(c) 15%
(d) None of these

Ans. (a)

At what rate per annum will a sum of 3,600 become 4,500 in 10 years at simple interest?
(a) 5%
(b) 2.5%
(c) 10%
(d) 6.75%

Ans. (b)

The difference between the compound and the simple interest on a certain sum at 7Â½% per annum for 3 years is 110.70. Find the sum:
(a) 6400
(b) 1200
(c) 320050
(d) 2400

Ans. (a)

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Find the sum of money which increases 1/10 of itself every year and amounts to 450 in 5 years at S.I ___
(a) 250
(b) 300
(c) 350
(d) 400

Ans. (b)

Mathew bought a microwave for 4000 on credit. The rate of interest for the first year is 5% and for the second year is 15%. How much will it cost him if he pays the amount after two years?
(a) 4950
(b) 4830
(c) 4620
(d) 4240

Ans. (b)

A sum doubles in 20 years at simple interest. How much is the rate per annum?
(a) 5%
(b) 4%
(c) 12%
(d) 18%

Ans. (a)

Find the compound interest on 8000 for 3 years at 5% per annum.
(a) 1451
(b) 1381
(c) 1261
(d) 1151

Ans. (c)

If the amounts for a fixed principal after 3 and 2 years at a certain rate of compound interest are in the ratioÂ  21 : 20. The rate of interest is
(a) 7%
(b) 6%
(c) 5%
(d) 4%

Ans. (c)

A sum was put at simple interest at a certain rate for 2 years. Had it been put at 1% higher rate, it would have fetched 24 more. Find the sum.
(a) 1200
(b) 1600
(c) 2000
(d) 2400

Ans. (a)

The difference between the compound and the simple interest on a certain sum at 7Â½% per annum for 3 years is 110.70. Find the sum:
(a) 6400
(b) 1200
(c) 3200
(d) 5000

Ans. (a)

The simple interest on a sum of money is 19th of the principal and the number of years is equal to the rate of percent per annum. The rate of interest per annum is __
(a) 2%
(b) 5%
(c) 4%
(d) 3 1/3%

Ans. (d)

The sum fetched a total simple interest of 4016.25 at the rate of 9 p.c.p.a. in 5 years. What is the sum?
(a) 8925
(b) 8259
(c) 8529
(d) 8952

Ans. (a)

The difference in simple interest between 13% and 12% p.a. for a sum in one year is 110. Then the sum is
(a) 13,000
(b) 15,000
(c) 10,000
(d) 11,000

Ans. (d)

The present population of a town is 25000. It grows at the rate of 4%, 5% and 8% during the first year, second year and third year respectively. Find its population after 3 years.
(a) 29484
(b) 29844
(c) 24984
(d) 29848

Ans. (a)

The simple interest on a certain sum of money for 4 years at 4 percent per annum exceeds the compound interest on the same sum for 3 years at 5 percent per annum by 57. Find the sum.
(a) 24,000
(b) 12,500
(c) 26,700
(d) 23,050

Ans. (a)

A sum of 1600 lent at simple interest at 12.5% per annum will become double in
(a) 6 years
(b) 7.5 years
(c) 8 years
(d) 9 1/4 years

Ans. (c)

Find compound interest of 5,000 at 10% per annum for 3 years
(a) 1,655
(b) 1,659
(c) 1,667
(d) 1,648

Ans. (a)

The value of a mobile phone which was purchased 2 years ago depreciates at 12% p.a.. If its present value is 9680, for how much was it purchased?
(a) 10000
(b) 12000
(c) 11500
(d) 12500

Ans. (d)

At what rate per annum simple interest will a sum of money triple itself in 25 years?
(a) 8
(b) 8.5
(c) 9.5
(d) 10

Ans. (a)

If the compound interest on a certain sum for 3 years at 20% per annum is \$728, find the simple interest.
(a) 575
(b) 600
(c) 620
(d) 675

Ans. (b)

A sum of 500/- was lent for two years at 2% compound interest. The interest for two years will be:
(a) 20.00
(b) 25.00
(c) 50.20
(d) 20.20

Ans. (c)

A man invested 1/3rd of the sum at 7%, 1/4th at 8% and the remaining at 10% for one year. If the annual interest is 408, then the investment is
(a) 8,400
(b) 4,800
(c) 5,000
(d) 7,200

Ans. (b)

The difference in the interest received from two different banks on \$1000 for 2 years is 20. Thus, the difference in their rates is
(a) 2%
(b) 1%
(c) 1.5%
(d) 0.5%

Ans. (b)

The difference between the compound interest and the simple interest on a certain sum at 10% per annum for two years is \$60. Find the sum.
(a) \$6,200
(b) \$6,000
(c) \$6,400
(d) \$7,000

Ans. (b)

Find the simple interest and the amount of \$2400 for 3 years 5 months and 15 days at the rate of 9%.
(a) 3451
(b) 3284
(c) 3147
(d) 3985

Ans. (c)

The difference in simple interest at 13% and 12% p.a. of a sum in one year is 110. Then the sum is
(a) 13,000
(b) 15,000
(c) 10,000
(d) 11,000

Ans. (d)

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At what rate per annum will a sum of \$3,600 become \$4,500 in 10 years at simple interest?
(a) 5%
(b) 2.5%
(c) 10%
(d) 6.75%

Ans. (b)

What sum of money lent out at compound interest will amount to \$968 in 2 years at 10% per annum, interest being charged annually?
(a) 900
(b) 825
(c) 780
(d) 800

Ans. (d)

The difference in simple interest on a certain sum of money for 3 years and 5 years at 18% per annum is \$2160. Then the sum is
(a) 6,500
(b) 4,500
(c) 6,000
(d) 7,500

Ans. (c)

A merchant borrowed \$2500 from the money lenders. For one loan, he paid 12% per annum and for the other 14% per annum. The total interest paid for one year was \$326. How much did he borrow at each rate?
(a) 1200 and 1300
(b) 1130 and 1175
(c) 225 and 350
(d) 325 and 370

Ans. (a)

The difference between compound interest and simple interest on a certain sum of money in 2 years at 4% per annum is 50. Find the sum
(a) 30,550
(b) 31,250
(c) 25,670
(d) 35,400

Ans. (b)

Find the amount of 12000 after 2 years compounded annually, the rate of interest being 5% p.a. during the first year and 6% p.a. during the second year. Also find the compound interest.
(a) 1653
(b) 1536
(c) 1356
(d) 1386

Ans. (c)

In what time will 1000 amount to 1331 at 10% per annum, compounded annually?Â­
(a) Â½ Â years
(b) 1 Â½ Â years
(c) 2/3 years
(d) 3 years

Ans. (d)

Find out the capital required to earn a monthly interest of 600 at 6% simple interest.
(a) 100000
(b) 120000
(c) 110000
(d) 130000

Ans. (b)

A sum of money lent at compound interest amounts to 1210 in two years and to 1464.10 in 4 years. Find the rate of interest.
(a) 12%
(b) 15%
(c) 10%
(d) 8%

Ans. (c)

A sum was put at simple interest at a certain rate for 2 years. Had it been put at a 3% higher rate, it would have fetched 72 more find the sum:
(a) 1000
(b) 1200
(c) 1500
(d) 1800

Ans. (b)

Simple interest on a certain amount is 9/16 of the principal. If the number representing the rate of interest in percent and time in years are equal, then the time for which the principal is lent out, is:
(a) 5 Â½ years
(b) 6 Â½ years
(c) 7 years
(d) 7 Â½ years

Ans. (d)

How does simple interest work?

Simple interest is a fixed rate of interest applied to the principal amount. Simple interest is calculated only on the original principal amount/quantity. Simply put, simple interests are calculated by taking the product of the principal amount and the rate x the time period.

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How does compounding interest work?

Compound interest is the process of calculating interest on the principal amount of a debt. It is the result of reinvesting the interest earned. The more you reinvest, the more you earn. It is also the fastest way to make money.

However, compounding interest isn’t always a good idea. Compounding is calculated each period based on the original principal plus any interest accrued in the previous period.

Simple vs Compounding Interest Info-graphic

#### Yash

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• Sharda Sharma says:

It’s good questions

• Elmira Silva says:

Is this Vernon Dudley?

• Ekramun Nahar Ani says:

I am Ekramun Nahar Ani .My id 201-11-998. My comment is this chapter is Mathematics of Finance. I learn this lesson and some math korlam .After it is very easy topic in Business Mathematics. Then I learnt Compound interest ,Simple interest etc. Now I korlam Simple and compound interst quiz korasi. My Score is 58%. Thak you sir .

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