Compound Interest – General Questions

1. A bank offers 5% compound interest calculated on half-yearly basis. A customer deposits Rs. 1600 each on 1st January and 1st July of a year. At the end of the year, the amount he would have gained by way of interest is:

A. Rs. 120
B. Rs. 121
C. Rs. 122
D. Rs. 123

Correct Answer: B. Rs. 121

Answer Explanation:

amount he would have gained by way of interest is

2. The difference between simple and compound interests compounded annually on a certain sum of money for 2 years at 4% per annum is Re. 1. The sum (in Rs.) is:

A. 625
B. 630
C. 640
D. 650

Correct Answer: A. 625

Answer Explanation:

The sum is

3. There is 60% increase in an amount in 6 years at simple interest. What will be the compound interest of Rs. 12,000 after 3 years at the same rate?

A. Rs. 2160
B. Rs. 3120
C. Rs. 3972
D. Rs. 6240
E. None of these

Correct Answer: C. Rs. 3972

Answer Explanation:

the compound interest is

4. What is the difference between the compound interests on Rs. 5000 for 1 1/2 year at 4% per annum compounded yearly and half-yearly?

A. Rs. 2.04
B. Rs. 3.06
C. Rs. 4.80
D. Rs. 8.30

Correct Answer: A. Rs. 2.04

Answer Explanation:

difference between the compound interests

5. The compound interest on Rs. 30,000 at 7% per annum is Rs. 4347. The period (in years) is:

A. 2
B. 2 1/2
C. 3
D. 4

Correct Answer: A. 2

Answer Explanation:

The period is

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