MCQ
Simple and Compound Interest MCQ - Practice Questions with Answers
Solve 12 Simple and Compound Interest questions for RAS/RPSC preparation.
Practice questions
Q1A courier-locker caution deposit of ₹1,000 is charged 20% per annum, compounded half-yearly. By how much does one-year compound interest exceed one-year simple interest at the same nominal annual rate?
At 20% per annum compounded half-yearly, each half-year rate is 10%, so one year has two conversion periods. The one-year gap is P(r/200)² = 1,000 × (20/200)² = 1,000 × 0.01 = ₹10. Checking: SI = ₹200 and CI = 1,000 × 1.1² − 1,000 = ₹210, so the difference is ₹10.
Q2A handloom cooperative's working-capital loan grows to ₹9,680 after 2 years and to ₹10,648 after 3 years under annual compounding. Simple interest on the original principal for 5 years at the same rate equals:
The third-year growth factor is 10,648/9,680 = 1.1, so the rate is 10% per annum. The principal is 9,680/(1.1)² = 9,680/1.21 = ₹8,000. Simple interest for 5 years is then 8,000 × 10 × 5/100 = ₹4,000.
Q3The compound interest on a bakery-oven loan for 2 years at 10% per annum is ₹1,680. Simple interest on the same principal for 3 years at the same rate is:
Two-year CI at 10% means P[(1.10)² − 1] = 1,680, so 0.21P = 1,680 and P = ₹8,000. Three-year SI on that principal is 8,000 × 10 × 3/100 = ₹2,400.
Q4A packaging-machine loan at 5% per annum has two-year compound interest exceeding two-year simple interest by ₹40. What is the principal?
For 2 years, CI − SI = P(r/100)². So P = 40/(5/100)² = 40/0.0025 = ₹16,000. Checking: SI = ₹1,600 and CI = 16,000 × 1.05² − 16,000 = ₹1,640, so the excess is ₹40.
Q5On a warehouse security deposit, compound interest (yearly) exceeds simple interest by ₹1,920 over 3 years at 20% per annum. What is the deposit?
For 3 years, CI − SI = P(r/100)²(3 + r/100). Substitute the given values: 1,920 = P(20/100)²(3 + 20/100) = P(0.04)(3.2) = 0.128P. Therefore P = 1,920/0.128 = 15,000. Checking: SI = 9,000 and CI = 15,000×1.2³ − 15,000 = 10,920, so the difference is ₹1,920.
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More questions
6When the excess of compound interest over simple interest for 2 years equals 1/64 of the principal, what is the annual rate of interest?
7A sum of ₹4,000 deposited for maintenance earns interest at 10% per annum. By how many rupees does three-year compound interest exceed three-year simple interest?
8On a grain-silo construction loan of ₹3,600, the two-year gap between compound and simple interest is ₹81. What annual rate was charged?
9₹6,000 placed in a bicycle-hire shop's savings scheme earns ₹1,440 as simple interest at 8% per annum. How many years did the deposit run?
10Solvent drums were financed so that the two-year difference between compound and simple interest at 4% per annum came to ₹4.80. Find the financed principal.
11A tool-hire deposit becomes thrice the principal in 10 years under simple interest. In how many years will it become five times the principal at the same rate?
12A cold-storage advance of ₹12,500 produces ₹3,000 simple interest in 4 years. At the same rate, the two-year compound-minus-simple interest gap is: