Compound Interest MCQs with Answers and Solutions for Competitive Exams

Question #501

The compound interest on a certain sum of money for 2 years at 8% per annum is Rs. 1248. What would be the simple interest on the same sum at the same rate for the same time?

A. Rs. 1150

B. Rs. 1200

C. Rs. 1220

D. Rs. 1240

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Correct Answer: Option B

Explanation:
Effective rate of compound interest for 2 years at 8% = 8 + 8 + (88)/100 = 16.64%. Simple interest rate = 8 * 2 = 16%. Given 16.64% of sum = 1248 => 1% of sum = 75. Simple Interest = 16% of sum = 16 * 75 = Rs. 1200.

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Question #502

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Find the compound interest on Rs. 40000 for 1 year at 16% per annum, compounded quarterly.

A. Rs. 6400.00

B. Rs. 6900.00

C. Rs. 6794.34

D. Rs. 7100.00

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Correct Answer: Option C

Explanation:
Quarterly rate = 16 / 4 = 4%. Time = 4 quarters. Amount = 40000 * (1 + 4/100)^4 = 40000 * (1.04)^4 = 40000 * 1.16985856 = Rs. 46794.34. Compound Interest = 46794.34 - 40000 = Rs. 6794.34.

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Question #503

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A sum of money placed at compound interest becomes double of itself in 6 years. In how many years will it become 8 times of itself?

A. 18 years

B. 12 years

C. 24 years

D. 30 years

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Correct Answer: Option A

Explanation:
The sum becomes 2^1 times in 6 years. It will become 8 (2^3) times in 3 * 6 = 18 years.

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Question #504

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The difference between simple interest and compound interest on a certain sum of money for 2 years at 10% per annum is Rs. 100. Find the sum.

A. Rs. 9000

B. Rs. 11000

C. Rs. 12000

D. Rs. 10000

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Correct Answer: Option D

Explanation:
Difference for 2 years = P * (R/100)^2 => 100 = P * (10/100)^2 => 100 = P * 0.01 => P = Rs. 10000.

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Question #505

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The compound interest on a certain sum for 2 years at 5% per annum is Rs. 1230. Find the principal sum.

A. Rs. 11500

B. Rs. 13000

C. Rs. 12000

D. Rs. 12500

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Correct Answer: Option C

Explanation:
Effective rate of compound interest for 2 years at 5% = 5 + 5 + (55)/100 = 10.25%. Given 10.25% of P = 1230 => P = 1230 / 0.1025 = Rs. 12000.

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Question #506

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What is the compound interest on Rs. 20000 for 1 year at 12% per annum, compounded half-yearly?

A. Rs. 2600

B. Rs. 2500

C. Rs. 2472

D. Rs. 2400

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Correct Answer: Option C

Explanation:
Half-yearly rate = 12/2 = 6%. Time = 2 half-years. Amount = 20000 * (1 + 6/100)^2 = 20000 * 1.1236 = Rs. 22472. Compound Interest = 22472 - 20000 = Rs. 2472.

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Question #507

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A sum of money invested at compound interest doubles itself in 14 years. In how many years will it become 4 times of itself?

A. 28 years

B. 21 years

C. 35 years

D. 42 years

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Correct Answer: Option A

Explanation:
The sum doubles (2^1) in 14 years. It will become 4 (2^2) times in 2 * 14 = 28 years.

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Question #508

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At what rate percent per annum will Rs. 40000 amount to Rs. 48400 in 2 years, compound interest compounded annually?

A. 12%

B. 10%

C. 8%

D. 14%

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Correct Answer: Option B

Explanation:
Amount/Principal = 48400 / 40000 = 121 / 100 = (11 / 10)^2. Therefore, 1 + R/100 = 11/10 => R/100 = 1/10 => R = 10%.

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Question #509

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The compound interest on a certain sum of money for 2 years at 5% per annum is Rs. 328. What would be the simple interest on the same sum at the same rate for the same time?

A. Rs. 310

B. Rs. 320

C. Rs. 326

D. Rs. 324

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Correct Answer: Option B

Explanation:
Effective rate of compound interest for 2 years at 5% = 5 + 5 + (55)/100 = 10.25%. Simple interest rate = 5 * 2 = 10%. Given 10.25% of sum = 328 => 1% of sum = 32. Simple Interest = 10% of sum = 10 * 32 = Rs. 320.

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Question #510

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Find the compound interest on Rs. 10000 for 1 year at 20% per annum, compounded quarterly.

A. Rs. 2155.06

B. Rs. 2250.00

C. Rs. 2000.00

D. Rs. 2200.00

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Correct Answer: Option A

Explanation:
Quarterly rate = 20 / 4 = 5%. Time = 4 quarters. Amount = 10000 * (1 + 5/100)^4 = 10000 * (1.05)^4 = 10000 * 1.21550625 = Rs. 12155.06. Compound Interest = 12155.06 - 10000 = Rs. 2155.06.

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Question #511

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A sum of money placed at compound interest becomes double of itself in 7 years. In how many years will it become 16 times of itself?

A. 35 years

B. 42 years

C. 21 years

D. 28 years

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Correct Answer: Option D

Explanation:
The sum becomes 2^1 times in 7 years. It will become 16 (2^4) times in 4 * 7 = 28 years.

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Question #512

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The difference between simple interest and compound interest on a certain sum of money for 2 years at 8% per annum is Rs. 64. Find the sum.

A. Rs. 10000

B. Rs. 12000

C. Rs. 9000

D. Rs. 11000

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Correct Answer: Option A

Explanation:
Difference for 2 years = P * (R/100)^2 => 64 = P * (8/100)^2 => 64 = P * (64 / 10000) => P = Rs. 10000.

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Question #513

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The compound interest on a certain sum for 2 years at 10% per annum is Rs. 441. Find the principal sum.

A. Rs. 2200

B. Rs. 2100

C. Rs. 2300

D. Rs. 2000

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Correct Answer: Option B

Explanation:
Effective rate of compound interest for 2 years at 10% = 10 + 10 + (1010)/100 = 21%. Given 21% of P = 441 => P = 441 / 0.21 = Rs. 2100.

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Question #514

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What is the compound interest on Rs. 50000 for 1 year at 16% per annum, compounded half-yearly?

A. Rs. 8320

B. Rs. 8600

C. Rs. 8000

D. Rs. 8500

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Correct Answer: Option A

Explanation:
Half-yearly rate = 16/2 = 8%. Time = 2 half-years. Amount = 50000 * (1 + 8/100)^2 = 50000 * 1.1664 = Rs. 58320. Compound Interest = 58320 - 50000 = Rs. 8320.

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Question #515

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A sum of money invested at compound interest doubles itself in 13 years. In how many years will it become 4 times of itself?

A. 39 years

B. 19 years

C. 32 years

D. 26 years

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Correct Answer: Option D

Explanation:
The sum doubles (2^1) in 13 years. It will become 4 (2^2) times in 2 * 13 = 26 years.

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Question #516

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The difference between simple interest and compound interest on a certain sum of money for 3 years at 10% per annum is Rs. 930. Find the sum.

A. Rs. 28000

B. Rs. 30000

C. Rs. 34000

D. Rs. 32000

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Correct Answer: Option B

Explanation:
Difference for 3 years = P * (R/100)^2 * (3 + R/100) => 930 = P * (10/100)^2 * (3 + 10/100) => 930 = P * (1/100) * (3.1) => 930 = P * 0.031 => P = 930 / 0.031 = Rs. 30000.

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Question #517

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At what rate percent per annum will Rs. 12500 amount to Rs. 14580 in 2 years, compound interest compounded annually?

A. 6%

B. 12%

C. 8%

D. 10%

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Correct Answer: Option C

Explanation:
Amount/Principal = 14580 / 12500 = 1458 / 1250 = 729 / 625 = (27 / 25)^2 = (1.08)^2. Therefore, 1 + R/100 = 1.08 => R = 8%.

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Question #518

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The compound interest on a certain sum of money for 2 years at 8% per annum is Rs. 416. What would be the simple interest on the same sum at the same rate for the same time?

A. Rs. 400

B. Rs. 380

C. Rs. 410

D. Rs. 412

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Correct Answer: Option A

Explanation:
Effective rate of compound interest for 2 years at 8% = 8 + 8 + (88)/100 = 16.64%. Simple interest rate = 8 * 2 = 16%. Given 16.64% of sum = 416 => 1% of sum = 25. Simple Interest = 16% of sum = 16 * 25 = Rs. 400.

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Question #519

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Find the compound interest on Rs. 50000 for 1 year at 12% per annum, compounded quarterly.

A. Rs. 6000.00

B. Rs. 6275.44

C. Rs. 6520.50

D. Rs. 6400.00

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Correct Answer: Option B

Explanation:
Quarterly rate = 12 / 4 = 3%. Time = 4 quarters. Amount = 50000 * (1 + 3/100)^4 = 50000 * (1.03)^4 = 50000 * 1.12550881 = Rs. 56275.44. Compound Interest = 56275.44 - 50000 = Rs. 6275.44.

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Question #520

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A sum of money placed at compound interest becomes double of itself in 5 years. In how many years will it become 64 times of itself?

A. 25 years

B. 35 years

C. 30 years

D. 40 years

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Correct Answer: Option C

Explanation:
The sum becomes 2^1 times in 5 years. It will become 64 (2^6) times in 6 * 5 = 30 years.

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