Compound Interest Questions PDF for SSC, Railways and Banking Exams
Compound Interest Questions PDF for SSC, Railways and Banking Exams

Quant Booster Dose – Compound Interest Questions PDF

Compound Interest Question PDF with Answers for government exams like SSC, Railways, Banking, FCI, CWC, Insurance Exams, UPSC, and other state PCS exams. As we all know in many competitive exams in Quantitative Aptitude/ Numerical Ability subject Compound Interest Questions asked repeatedly, so you cannot ignore the Compound Interest Questions PDF.

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Compound Interest Questions PDF for SSC, Railways and Banking Exams

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Compound Interest Questions with Answers | Download Free PDF

What is Compound Interest?

Compound interest is the adding of interest to the principal sum of a loan or deposit. It is the outcome of reinvesting interest rather than paying it out, so that interest is received on the principal plus previously collected interest in the next period.

Compound interest is the interest imposed on a loan or deposit amount. It is the most commonly used concept in our daily existence. The compound interest for an amount depends on both Principal and interest gained over periods. This is the main difference between compound and simple interest.

Compound interest is very useful in the banking and finance sectors and is also useful in other sectors. A few of its use are:

  • Growth of the population of a country
  • Value of investment over a period of time.
  • For finding Inflated costs and the depreciated value of any article.
  • For predicting the growth of any institution or country.

Compound Interest (C.I) = Amount – Principal

Formulas for Compound Interest Questions

Compound Interest is calculated, after calculating the total amount over a period of time, based on the rate of interest, and the initial principal. For an initial principal of P, rate of interest per annum of r, time period t in years, frequency of the number of times the interest is compounded annually n, the formula for calculation of CI is as follows:

Compound Interest (CI) = P(1 + r/100)n – P

Where,
  • P = Principal
  • r = Rate of Interest
  • n = Number of Times Interest is Compounded Per Year
  • t = Time (in years)

How to Calculate Compound Interest?

Compound interest is the interest paid both on principal as well as interest accumulated. The interest earned at each interval is added to the initial principal ad thus principal goes on increasing.  Use following methods to find compound interest.

Step 1: Note, Principal, Rate, and Time period given

Step 2: Calculate amount using formula A = P(1 + r/100)n

Step 3: Find Compound Interest using the formula CI = Amount – Principal

Short Formulas and Quick Tricks for Compound Interest Questions

Knowing the compound Interest formulas and quick tricks related to compound interest can help candidates solve questions efficiently and accurately, saving them valuable time during the exam.

  1. The amount which is lent/deposited is called the Principal.
  2. The money that the principal generates is called Interest. This is the money generated as a result of borrowing/lending.
  3. Compound Interest is the interest calculated on the cumulative amount, rather than being calculated on the principal amount only.
  4. Amount, A = P [1 + (R / 100)]n, where P is the principal, R is the rate of interest per unit time period and n is the time period.
  5. Compound Interest, CI = Amount – Principal
  6. If the compounding period is not annual, the rate of interest is divided in accordance with the compounding period. For example, if interest is compounded half-yearly, then the rate of interest would be R / 2, where ‘R’ is the annual rate of interest.
  7. If interest is compounded daily, the rate of interest = R / 365 and A = P [ 1 + ( {R / 365} / 100 ) ]^T, where ‘T’ is the time period. For example, if we have to calculate the interest for 1 year, then T = 365. For 2 years, T = 730.
  8. If interest is compounded monthly, the rate of interest = R / 12 and A = P [ 1 + ( {R / 12} / 100 ) ]^T, where ‘T’ is the time period. For example, if we have to calculate the interest for 1 year, then T = 12. For 2 years, T = 24.
  9. If interest is compounded half-yearly, rate of interest = R / 2 and A = P [ 1 + ( {R / 2} / 100 ) ]^T, where ‘T’ is the time period. For example, if we have to calculate the interest for 1 year, then T = 2. For 2 years, T = 4.
  10. For finding the time period in which a sum of money will double itself at the R % rate of compound interest compounded annually, we generally use either of the following two formulas :
  11. Time, T = 72 / R Years
  12. Time, T = 0.35 + (69 / R) Years
  13. When the rate of interest is different for different years, say R1, R2, R3 and so on, the amount is calculated as A = P [1 + (R1 / 100)] [1 + (R2 / 100)] [1 + (R3 / 100)]

Compound Interest Practice Questions with Answers

1. If the interest rate is 25%, what will be the compound interest of Rs 8800 , for 1 year, if the interest is compounded semi-annually (Half-yearly)?

(a) 2557.5

(b) 2337.5

(c) 2735.5

(d) 3337.5

(e) None of these

Show Correct Answers

Correct Answer:  (b) 2337.5

Explanation:  The interest rate is 25% , Principal (P) = Rs 8800

The interest is compounded semi-annually (Half-yearly)

Formula Used: 

For Compound Interest , Amount =  P × (1+R/100)n   [P=  Principal , R= rate of interest]

Concept Used:

{Amount = Principal + Interest}

Interest is compounded semi-annually, so the rate of interest will be half of the yearly rate of interest.

Calculation:

Amount  = 8800 × (1+ 12.5 / 100)2

⇒ 8800 × (1 + 1/8)2

⇒ 8800   × (9/8)2

⇒ 8800   × 81 / 64 = 11137.5

So, interest is (11137.5 – 8800) = Rs 2337.5

2 . What is the compound interest on Rs. 16400 for 1 year at 9% per annum when compounded half-yearly?

(a) Rs. 1640.40

(b) Rs. 1608.20

(c) Rs. 1509.21

(d) Rs. 1680.90

(e) None of these

Show Correct Answers

Correct Answer:  (c) Rs. 1509.21

Explanation:  Rate = 9% per annum

Principal amount = 16400

Interest is compounded half yearly

Concept Used:

For half-yearly compound interest just double the time and half the rate then the question is a general compound interest question.

Formula Used:

Amount = Principal[1 + Rate/100]Time

Calculation: 

Rate = 9%/2 = 4.5%

Time = 1 × 2 = 2 year

Amount = Principal[1 + Rate/100]Time

Amount = 16400[1 + 4.5/100]2

  Amount = 16400 [1 + 9/200]2

  Amount = 16400 [209 / 200]2

Amount = 16400 [43681 /40000]

Amount  = 17909.21

Interest = Amount – Principal

Interest = 17909.21 – 16400

Interest =  1509.21

3. ₹1,20,000 becomes ₹1,50,528 in two years at a certain rate of compound interest, compounding annually in an investment scheme. In the same scheme, the sum of ₹P is invested and it becomes ₹3,51,232 in three years. What is the value of P?

(a) 3,00,000

(b) 2,25,000

(c) 2,75,000

(d) 2,50,000

(e) None of these

Show Correct Answers

Correct Answer:  (d) 2,50,000

Explanation:  Initial amount: ₹1,20,000

Final amount after two years: ₹1,50,528

Final amount of the sum of ₹P after three years: ₹3,51,232

Concept used:

The compound interest formula is A = P(1 + r/n)(nt) where A is the final amount, P is the initial amount, r is the interest rate, n is the number of times interest is compounded per year, t is the time in years.

Solution:

Calculate the interest rate from the initial and final amount given for two years.

Use the interest rate and the final amount after three years to calculate the initial amount P.

⇒ r = ((₹1,50,528/₹1,20,000)(1/2)) – 1 = 0.12 (or 12% per annum)

⇒ P = ₹3,51,232 / (1 + 0.12)³ = ₹2,50,000

4. Find the compound interest, compounding annually on ₹75,000 for 3 years, if the rate of interest is 5% for the first year, 6% for the second year and 8% for the third year.

(a) ₹15,150

(b) ₹15,153

(c) ₹15,160

(d) ₹15,260

(e) None of these

Show Correct Answers

Correct Answer:  (b) ₹15,153

Explanation:  Principal: ₹75,000

Rate of interest for the first year: 5%

Rate of interest for the second year: 6%

Rate of interest for the third year: 8%

Concept:

Compound interest is calculated individually for each time period.

Calculation:

⇒ CI for first year = 5/100 × 75000 = ₹3750

⇒ New Principal for second year = 75000 + 3750 = ₹78750

⇒ CI for second year = 6/100 × 78750 = ₹4725

⇒ New Principal for third year = 78750 + 4725 = ₹83475

⇒ CI for third year = 8/100 × 83475 = ₹6678

✅ Read Also: Attempt 1700+Topic-Wise Reasoning Ability Questions Here

5. A sum on compound interest amounts to Rs.2,809 in 2 years and Rs.2,977.54 in 3 years. The rate per cent per annum is:

(a) 12%

(b) 6%

(c) 10%

(d) 8%

(e) None of these

Show Correct Answers

Correct Answer:  (b) 6%

Explanation:  Data:

Amount after 2 years = Rs.2809,

Amount after 3 years = Rs.2977.54.

Concept:

The compound interest for the third year = amount after 3 years – amount after 2 years. The rate is then calculated by dividing the compound interest by the amount after 2 years and multiplying by 100.

Solution:

Compound Interest for the 3rd year = Rs.2977.54 – Rs.2809 = Rs.168.54,

Rate = (168.54/2809) × 100 = 6%.

6. Find the compound interest on Rs. 15,600 at 12% per annum for 9 months, compounded quarterly.

(a) Rs. 1,446.54

(b) Rs. 1,972.40

(c) Rs. 1,925.75

(d) Rs. 1,969.25

(e) None of these

Show Correct Answers

Correct Answer:  (a) Rs. 1,446.54

Explanation:  Rs. 15,600 at 12% per annum for 9 months, interest compounded quarterly.

Concept used:

1 quarter = 3 months

1 year = 12 months

In case of the compound interest,

Amount = P(1 + R/100) N

CI = P(1 + R/100) N– P

where

P = Principal amount

R = Rate of interest per year

N = Time in years

Calculation:

12% per annum

⇒ (12/4)% per quarter

⇒ 3% per quarter

9 months = 3 quarters

So, after 9 months the amount becomes

⇒ 15600(1 + 3/100) 3

⇒ 15600 × 1.03 3 ≈ Rs. 17046.54

Now, incurred compound interest = 17046.54 – 15600 = Rs.  1446.54

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7. An equal sum of Rs. X is invested in two schemes, A and B. Scheme A offers simple interest at a rate of 18% per annum, while Scheme B offers compound interest at a rate of 20% per annum compounded annually. After 2 years, the total amount received from both schemes A and B is Rs. 42,000. Find the value of 2X.

(a) Rs. 32000

(b) Rs. 30000

(c) Rs. 24000

(d) Rs. 28000

(e) None of these

Show Correct Answers

Correct Answer:  (b) Rs. 30000

Explanation:  SI% for 2 years = 18 ×  2 = 36%

Amount % = 136%

CI% for 2 years = 20 + 20 + 20 ×  20/100 = 44%

Amount % = 144%

X ×  (136 + 144)/100 = 42000

X ×  280/100 = 42000

X = 15000

2X = Rs. 30000

8. An amount of ₹ 25,000 in 2 years at compound interest compounded annually, if the interest rate for the successive years be 4% and 5% per annum respectively, is:

(a) ₹27,300

(b) ₹29,000

(c) ₹26,800

(d) ₹28,000

(e) None of these

Show Correct Answers

Correct Answer:  (a) ₹27,300

Explanation:  Principal (P) = ₹25,000

Interest rates: 4% for the 1st year and 5% for the 2nd year

Time (t) = 2 years

Formula used:

Amount for the first year: A1 = P(1 + r1/100)

Amount for the second year: A2 = A1(1 + r2/100)

Calculations:

A1 = 25000(1 + 4/100)

⇒ A1 = 25000 × 1.04

⇒ A1 = 26000

A2 = 26000(1 + 5/100)

⇒ A2 = 26000 × 1.05

⇒ A2 = 27300

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9. A sum becomes Rs. 33800 in 2 years and Rs. 43,940 in 3 years, when lent in a scheme of compound interest (compounding annually). If double the sum is invested in the same scheme for 2 years, then what will be the amount obtained at end of 2 years?

(a) Rs. 62480

(b) Rs. 67600

(c) Rs. 71240

(d) Rs. 60420

(e) None of these

Show Correct Answers

Correct Answer:  (b) Rs. 67600

Explanation:  A sum becomes Rs. 33800 in 2 years and Rs. 43,940 in 3 years,  (compounding annually).

Double the sum is invested in the same scheme for 2 years,

Concept used:

For compound interest, Amount = P (1 + R/100)n [ P = principal, R = rate of interest and n = number of years}

Calculation:

Compound interest obtained in 3rd year,

⇒ 43,940 – 33800 = 10140

The rate of interest will be,

⇒ (10140 / 33800) × 100 = 30%

The rate of interest is same so if we doubled the sum the obtained interest is also doubled.

So the amount will also be doubled.

The amount will be,

⇒ 33800 × 2 = Rs 67600

10. Rs. 6000 is lent at the rate of 8 percent per annum on compound interest (compounded quarterly). What will be the compound interest of 6 months?

(a) Rs. 268.6

(b) Rs. 190.5

(c) Rs. 242.4

(d) Rs. 164.6

(e) None of these

Show Correct Answers

Correct Answer:  (c) Rs. 242.4

Explanation:  Principal = Rs.6000

Rate = 8% ; Time = 6 months

Formula used:

A = P × {1 + (R/100)}T

Compound interest (C.I) = A – P

Where, A = amount ; P = principal ; R = rate ; T = time

Concept used:

If interest is compounded quarterly, then

New rate = (R/4)% ;

New Time = T × 4

Calculation:

According to the question:

New rate = (8/4)% = 2%

New time = (6/12) × 4 = 2 years

Amount = P × {1 + (R/100)}T

⇒ 6000 × {1 + (2/100)}2

⇒ 6000  × {51/50}2

⇒ 6000  × {2601/2500}

⇒ Rs.6242.4

Compound interest (C.I) = 6242.4 – 6000 = Rs.242.4

All the Average questions are formulated as per the level of Bank PO exams. The Average questions in this PDF has a moderate and hard level of difficulty. All the candidates who are preparing for banking exams are advised to practice all these important questions to score well in the exam. To remove any doubt or difficulty in any topic, go through the study notes of each topic from the links given above.

Why Quantitative Aptitude Compound Interest Questions PDF is Important for Exams?

  • All the questions prepare by Exams experts.
  • The practice questions covered are across the levels i.e. Easy, Moderate, and Difficult.
  • Provides a detailed approach to the solution of each question.
  • Focuses on all the new patterns and advanced-level type questions.
  • Compound Interest Questions PDF boosts confidence and reduces pre-exam jitters by regularly attempting a variety of questions and tackling the difficulty level expected in the final exam.

This Quant Booster Dose Compound Interest Questions PDF is useful for the upcoming Banking and Insurance exams i.e. IBPS PO, SBI PO, Clerk, IBPS RRB PO & Clerk, RBI Assistant, RBI Grade B, NABARD, LIC AAO, SSC (CGL, CHSL, MTS, CPO, and Constable), Railway RRB (NTPC, Group D, JE, ALP) & Other Government Exams.

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Here we are providing you with New Pattern Quantitative Aptitude Quizzes (Compound Interest Questions) for SSC, Railway & Banking Exam, based on the latest pattern of your daily practice.

Practice Set- 1 Practice Set- 2 Practice Set- 3
Practice Set- 4 Practice Set- 5 Practice Set- 6
Practice Set- 7 Practice Set- 8 Practice Set- 9
Practice Set- 10 More…… Complete Quant Study Material

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8700+ Quantitative Aptitude Topic wise Questions and Answers – Download Free PDF

8700+ Quantitative Aptitude Topic wise Questions and Answers – Download Free PDF

Quant Booster Dose – Topic-wise Quantitative Aptitude Questions and Answers 

 

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