Compound Interest

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Principal (P): The money borrowed out for a certain period is called the principal or the sum.

Interest (R%): Some extra money paid for using other’s money is called interest.

Time (t): Number of Years.

Compound Interest: The compound interest is interest calculated on the initial principal amount with includes all of the interest of previous period of a sum. It can be calculated yearly or half-yearly or quarterly.

Formula for Compound Interest:

1. If interest is compound annually, then:

$$Amount = P\left (1+\frac{R}{100} \right )^{2}$$

2. If interest is compounded Half-yearly:

$$Amount = P\left (1+\frac{R}{2×100} \right )^{2t}$$

3. If interest is compounded quarterly:

$$Amount = P\left (1+\frac{R}{4×100} \right )^{4t}$$

4. If interest is compounded annually but time is in fraction, like $$2\frac{3}{4}$$ years

$$Amount = P\left (1+\frac{R}{100} \right )^{2}×\left (1+\frac{($$\frac{3}{4}$$)R}{100} \right )$$

5. If rates are different for different years say X%, Y%, Z% for 1st, 2nd and 3rd year respectively.

Then, $$Amount = P\left (1+\frac{X}{100} \right )\left (1+\frac{Y}{100} \right )\left (1+\frac{Z}{100} \right )$$

1 Suraj borrowed ₹ 2.5 lakh from a bank to purchase one car. If the rate of interest be 6% per annum compounded annually, what payment he will have to make after 2 years 6 months?

A
₹ 2,89,325
B
₹ 2,90,425
C
₹ 2,95,725
D
₹ 2,85,725

2 An amount was lent for one year at the rate of 18% per annum compounding annually. Had the compounding been done half yearly, the interest would have increased by ₹ 324. What was the amount (in ₹) lent?

A
₹ 40000
B
₹ 41000
C
₹ 42000
D
₹ 43000

3 What annual payment will discharge a debt of ₹ 50,440 due in 3 years at 5% per annum compounded annually? 

A
₹18,522
B
₹18,544
C
₹18,566
D
₹18,588

4 ₹ 39,030 is divide between A and B in such a way that amount given to A on C.I. in 7 years is equal to amount given to B on C.I. in 9 years. Find the part of A. If the rate of interest is 4%:

A
₹ 20,230
B
₹ 20,240
C
₹ 20,260
D
₹ 20,280

5 A person took a loan of ₹ 6000 for 3 years, at 5% per annum compound interest. He repaid ₹ 2100 in each of the first 2 years. The amount he should pay at the end of 3rd to clear all his debts is:

A
₹ 2324.50
B
₹ 2425.50
C
₹ 2526.50
D
₹ 2627.50

6 Divide ₹ 3364 between Sanjay and Sekh, so that Sanjay's Share at the end of 5 years may equal to Sekh's share at the end of 7 years, compound interest being at 5 percent:

A
₹ 1760 and ₹1600
B
₹ 1700 and ₹1630
C
₹ 1764 and ₹1600
D
₹ 1720 and ₹1650

7 A sum of cash 4 times it'self at compound interest in 20 years. In how many years will it become 16 times?

A
30
B
40
C
50
D
60

8 The difference between simple and compound interest compounded annually on a certain sum of money for 3 years at 4% per annum is ₹ 1. Find the sum. 

A
₹ 200.6
B
₹ 202.6
C
₹ 204.6
D
₹ 205.6

9 A man borrows ₹ 4000 at 20% compound rate of interest. At the end of each year he pays back ₹ 1500. How much amount should he pay at the end of the third year to clear all his dues ?

A
₹ 2932
B
₹ 2942
C
₹ 2952
D
₹ 2962

10 The compound interest on ₹ 7500 in 2 years when the successive rate of interest on successive years is 8% and 10% respectively:

A
₹ 1310
B
₹ 1410
C
₹ 1510
D
₹ 1610