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.
1Suraj 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
Correct Ans:A
Explanation:
⇒ CI for 2 years 6 months at the rate of 6, applying the net% effect for first 2 years ⇒ = 6 + 6 + (6 × 6)/100 = 12.36% ⇒ Rate of interest for 6 months = (6/12) × 6 = 3% ⇒ For next 6 months = 12.36 + 3 + (12.36 × 3) /100 = 15.36 + 0.37% = 15.73% ⇒ Here, we can see that in 2 years 6 months the given compound rate of interest is approximate 15.73%. ⇒ Now, 115.73% of 250000 = (115.73 × 250000)/100 = 289,325. ⇒ Hence, option D is correct.
A
2An 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
Correct Ans:A
Explanation:
Let the principal be 'x'. Amount lent for 1 yr at 18% per annum compounding annually, Amount = P (1 + r/100)n Amount = x(1 + 18/100) = 1.18x When compounding been done half yearly, r = 9%; n = 2 years Amount = x( 1 + 9/100)2 = 1.1881x We got from Q, 1.1881x - 1.18x = 324 0.0081x = 324 x = 324/0.0081 x = ₹ 40,000 Hence, the principal amount is ₹ 40,000.
A
3What annual payment will discharge a debt of ₹ 50,440 due in 3 years at 5% per annum compounded annually?
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
Correct Ans:D
Explanation:
We know Let the principal of A and B be 'a' and 'b' respectively. Amount = ₹ 39,030 r = 4% Amount given to A for 7 yrs = Amount given to B for 9 yrs Amount = P[1+ (r/100)]n a[1 + (4/100)]7 = b[1 + (4/100)]9 a/b = [1 + (4/100)]9/[1 + (4/100)]7 a/b = [1 + (4/100)]2/1 a/b = [26/25]2/1 a : b = 676/625 a : b = 676 : 625 Part of A = 39030×(676/1301) = ₹ 20,280.
D
5A 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
Correct Ans:B
Explanation:
Given, Principal, P = ₹ 6000 No. of years, n = 3 Rate of interest, r = 5% per annum. Amount repaid at first year = ₹ 2100 Amount repaid at second year = ₹ 2100 For 1st year, Compound Interest, C.I = P {[1 + (r/100)]n - 1} ⇒ C.I = 6000 × {[1 + (5/100)]1 - 1} = 6000 × {[1 + ($$\frac{1}{2}$$0)] - 1} = 6000 × {[2$$\frac{1}{2}$$0] - 1} = 6000 × {$$\frac{1}{2}$$0)} = 300 At the end of 1st year, Amount payable = Principal + C.I = 6000 + 300 = 6300 As the person paid ₹ 2100 at first year, the principal for 2nd year = 6300 - 2100 = 4200 For 2nd year, Compound Interest, C.I = 4200 × {[1 + (5/100)]1 - 1} = 4200 × {$$\frac{1}{2}$$0)} = 210 At the end of 2nd year, Amount payable = Principal (for 2nd year) + C.I = 4200 + 210 = 4410 As the person paid ₹ 2100 at second year, the principal for 3rd year = 4410 - 2100 = 2310 For 3rd year, Compound Interest, C.I = 2310 × {[1 + (5/100)]1 - 1} = 2310 × {$$\frac{1}{2}$$0)} = 115.5 So, The amount that the person should pay at the end of 3rd to clear all his debts = Principal (for 3rd year) + C.I = 2310 + 115.5 = ₹ 2425.5
B
6Divide ₹ 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:
7A 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
Correct Ans:B
Explanation:
By using given condition, P (1 + R /100)20 = 4 P (1 + R/100)20 = 4 (1 + R/100)20 = 22 -- Let P (1 + R/100)n = 16 P (1 + R/100)n = 16 = 24 ---- Using (1) (1+R/ 100)n = (1+R /100)40 n = 40 Thus required time 40 years.
B
8The 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
Correct Ans:D
Explanation:
The difference between simple interest and compound interest for 3years given by C.I - S.I = P[(R/100)² × ((R/100) + 3)]
1 =×[(4/100)² × ((4/100) + 3)]
1 =x × ($$\frac{1}{2}$$5)² × (76/25)
1 = 76x/15625
x = 205.59.
Hence the required sum is ₹ 205.6
D
9A 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
Correct Ans:C
Explanation:
Amount = 4000 20% of 4000 = 800 At the end of 1st year = 4000 + 800 = 4800 Pays back = 1500 Amount = 4800 -1500 = 3300 20% of 3300 = 660 At the end of 2nd year = 3300 + 660 = 3960 Pays back = 1500 Amount = 3960 - 1500 = 2460 20% of 2460 = 492 Amount to be paid at the end of third year = 2460 + 492 = 2952
C
10The 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
Correct Ans:B
Explanation:
amount at the end of 2nd year = ₹ 7500 (1 + 8/100) (1 + 10/100) = ₹ 7500 × 1.08 × 1.10 = ₹ 8910 Thus C.I. for two years = amount - principal = ₹ 8910 - ₹ 7500 = ₹ 1410