simple-compound-interest-l2 MCQ

Question 1

In an error clinic, Imran writes: "Rs 1000 at 10 percent for 3 years gives 30 percent compound increase, so amount is Rs 1300." What is the named trap?

Accepted Answer

Imran’s answer is a classic transfer error. He treats compound growth like simple interest by adding 10 percent three times on the original base. A year table would show the base should become Rs 1100 and then Rs 1210.

Question 2

Which pair is the best cross-topic link for compound interest structure?

Accepted Answer

Population growth and depreciation both transfer the same repeated-percentage idea. Meena can compare starting value, direction of change, percent change and final value to see the link without learning a new formula.

Question 3

Which statement correctly compares simple and compound interest for the same positive rate and more than one year?

Accepted Answer

After the first compounding interval, compound interest begins to use a larger base. That is why Devika should expect it to be usually greater than simple interest when rate is positive and time is more than one period.

Question 4

Assertion: For Rs 2000 at 5 percent, first-year simple interest and first-year compound interest are equal. Reason: In the first year, both rules use the original principal.

Accepted Answer

The assertion-reason pair is fully correct. In year one, both simple and compound calculations start from Rs 2000. The compound rule becomes different from year two onward because the amount has changed.

Question 5

A teacher asks pupils to fill a year-wise table before giving the formula. What is the best pedagogical reason?

Accepted Answer

The year-wise table is a concept-building tool. It lets Asha see simple interest hold the principal constant while compound interest updates the base after each year. That makes the formula meaningful later.

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