# Mathematics Questions and Answers – Compound Interest

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This set of Mathematics Multiple Choice Questions & Answers (MCQs) focuses on “Compound Interest”.

1. Calculate the simple interest if the principal amount is 50000 and the rate is 2% for 4 years.
a) 4000
b) 400
c) 40000
d) 40

Explanation: S.I. = PNR/100
⇒ S.I. = 50000 × 2 × 4/100 = 4000.

2. Find the Compound Interest on Rs. 1000 for two years at 2% per annum.
a) 20
b) 20.5
c) 20.4
d) 20.6

Explanation: Principal for the first year = Rs. 1000
Interest for the first year = 1000 × 2 × 1/100 = Rs. 20
Amount at the end of one year = 1000 + 20 = Rs. 1020
Interest for second year = 1020 × 2 × 1/100 = Rs. 20.4
Principal for the second year = Rs. 1020
Amount at the end of one year = 1000 + 20. 4 = Rs. 1040.4
C.I. = Amount – Principal = 1040.4 – 1020 = Rs. 20.4.

3. Evaluate the compound interest on Rs. 10101 for 3 years at the rate of 9% per annum compounded annually.
a) 2980
b) 30000
c) 10101
d) 33333

Explanation: A = P (1 + $$\frac{R}{100})$$n
⇒ A = 10101 (1 + $$\frac{9}{100}$$)3 = 10101 ($$\frac{109}{100}$$)3 = Rs. 13081.08
C.I. = A – P = 13081.08 – 10101 = Rs. 2980.08.

4. Vidhya lent Rs. 5000 to Kavya for 3 years at the rate of 5% per annum compound interest. Calculate the amount that Vidhya will get after 3 years.
a) 5789
b) 5788.12
c) 5788.13
d) 5788

Explanation: A = P (1 + $$\frac{R}{100})$$n
Amount for 3 years = 5000 (1 + $$\frac{5}{100}$$)3 = 5000 ($$\frac{21}{20}$$)3 = 5788.13.

5. A farmer gets a loan of Rs. 100000 against his fixed deposits. If the rate of interest is 1.5 paise per rupee per annum, calculate the compound interest payable after 2 years.
a) 22250
b) 42250
c) 52250
d) 32250

Explanation: R = 1.5 paise per rupee per annum = 1.5 × 100 paise per hundred rupee per annum
= 1.5 × $$\frac{100}{100}$$ rupee per hundred rupee per annum = 1.5%
Amount = 100000 (1 + $$\frac{1.5}{100}$$)2 = 100000 ($$\frac{23}{20}$$)2 = 132250
C.I. = 132250 – 100000 = Rs. 32250.

6. Calculate the compound interest at the rate of 6% per annum for 2 years on the principle which in 2 years at the rate of 2% per annum gives Rs. 8000 as simple interest.
a) 50000
b) 49440
c) 59440
d) 49000

Explanation: P = 8000 × $$\frac{100}{2}$$ × 2 = 400000
A = 400000(1 + $$\frac{6}{100}$$)2 = 400000 ($$\frac{53}{50}$$)2 = Rs. 449440
C.I. = 449440 – 400000 = Rs. 49440.

7. Compute the compound interest on Rs. 16000 for 2 years 10% per annum when compounded half yearly.
a) 18600
b) 17640
c) 18640
d) 17600

Explanation: A = P (1 + $$\frac{R}{200}$$)2n
⇒ A = 16000 (1 + $$\frac{10}{200}$$)2 = 16000 ($$\frac{21}{20}$$)2 = Rs. 17640.

8. Find the amount on Rs. 5000 at the rate of 20% per annum for 18 months when interest is compounded half yearly.
a) 6644
b) 6666
c) 6000
d) 6655

Explanation: n = 18/12 = 3/2
A = P (1 + $$\frac{R}{200}$$)2n = 5000 (1 + $$\frac{20}{200}$$)2n = Rs. 6655.

9. If the amount is Rs. 400 and Principal is Rs. 100 which is compounded half yearly for 1 year, calculate the rate of interest.
a) 10
b) 200
c) 2
d) 20

Explanation: A = P (1 + $$\frac{R}{200}$$)2n
⇒ 400 = 100 (1 + $$\frac{R}{200}$$)2
⇒ 2 = 1 + $$\frac{R}{200}$$
R = 200.

10. Calculate the compound interest on Rs. 4000 for 2 years at 20% per annum when compounded annually.
a) 1856.4
b) 1756.4
c) 1846.4
d) 1746.4

Explanation: A = P (1 + $$\frac{R}{200}$$)2n = 4000($$\frac{11}{10}$$)4 = Rs. 5856.4