Compound Interest

What is the compound interest earned at the end of 3 years?
I.	Simple interest earned on that amount at the same rate and for the same period is Rs. 4500.
II.	The rate of interest is 10 p.c.p.a.
III.	Compound interest for 3 years is more than the simple interest for that period by Rs. 465.

A:

I and II only

B:

II and III only

C:

I and III only

D:

I and Either II or III only

Answer: D

I. gives, S.I for 3 years = Rs. 4500.

II. gives, Rate = 10% p.a.

III. gives, (C.I.) - (S.I.) = Rs. 465.

Clearly, using I and III we get C.I. = Rs. (465 + 4500).

Thus, II is redundant.

Also, from I and II, we get sum =		100 x 4500		= 15000.
		10 x 3

Now C.I. on Rs. 15000 at 10% p.a. for 3 years may be obtained.

Thus, III is redundant.

Either II or III is redundant.

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Mr. Gupta borrowed a sum of money on compound interest. What will be the amount to be repaid if he is repaying the entire amount at the end of 2 years?
I.	The rate of interest is 5 p.c.p.a.
II.	Simple interest fetched on the same amount in one year is Rs. 600.
III.	The amount borrowed is 10 times the simple interest in 2 years.

A:

I only

B:

III only

C:

I or II only

D:

II and Either I or III only

Answer: D

I. gives, Rate = 5% p.a.

II. gives, S.I. for 1 year = Rs. 600.

III. gives, sum = 10 x (S.I. for 2 years).

Now I, and II give the sum.

For this sum, C.I. and hence amount can be obtained.

Thus, III is redundant.

Again, II gives S.I. for 2 years = Rs. (600 x 2) = Rs. 1200.

Now, from III, Sum = Rs. (10 x 1200) = Rs . 12000.

Thus, Rate =	100 x 1200	= 5% p.a.
	2 x 12000

Thus, C.I. for 2 years and therefore, amount can be obtained.

Thus, I is redundant.

Hence, I or III redundant.

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What will be the compound interest earned on an amount of Rs. 5000 in 2 years?
I.	The simple interest on the same amount at the same rate of interest in 5 years is Rs. 2000.
II.	The compound interest and the simple interest earned in one year is the same.
III.	The amount becomed more than double on compound interest in 10 years.

A:

I only

B:

I and II only

C:

II and III only

D:

I and III only

Answer: A

P = Rs. 5000 & T = 2 years.

I. S.I. on Rs. 5000 in 5 years is Rs. 2000.

	5000 x R x 5	= 2000 R = 8.
	100

Thus I only gives the answer.

Correct answer is (A).

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What is the rate of interest p.c.p.a.?
I.	An amount doubles itself in 5 years on simple interest.
II.	Difference between the compound interest and the simple interest earned on a certain amount in 2 years is Rs. 400.
III.	Simple interest earned per annum is Rs. 2000.

A:

I only

B:

II and III only

C:

All I, II and III

D:

Any two of the three

Answer: E

I.	P x R x 5	= P R = 20.
	100

II. P		1 +	R		2	- P -	P x R x 2	= 400 PR² = 4000000.
			100				100

III.	P x R x 1	= 2000 PR = 200000.
	100

	PR²	=	4000000	R = 20.
	PR		200000

Thus I only or (II and III) give answer.

Correct answer is (E).

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An amount of money was lent for 3 years. What will be the difference between the simple and the compound interest earned on it at the same rate?
I.	The rate of interest was 8 p.c.p.a.
II.	The total amount of simple interest was Rs. 1200.

A:

I alone sufficient while II alone not sufficient to answer

B:

II alone sufficient while I alone not sufficient to answer

C:

Either I or II alone sufficient to answer

D:

Both I and II are not sufficient to answer

Answer: E

Given: T = 3 years.

I. gives: R = 8% p.a.

II. gives: S.I. = Rs. 1200.

Thus, P = Rs. 5000, R = 8% p.a. and T = 3 years.

Difference between C.I. and S.I. may be obtained.

So, the correct answer is (E).

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Questions for: Compound Interest