Test: Simple & Compound Interest - JAMB MCQ

Simple interest can be calculated using the formula:
Simple Interest = (Principal × Rate × Time) / 100.
Substituting the values: (50,000 × 8 × 3) / 100
= N12,000.

Compound interest can be calculated using the formula:
Compound Interest = Principal × [(1 + Rate/100)^Time - 1].
Substituting the values: 10,000 × [(1 + 6/100)² - 1]
= N1,220.80.

Simple interest can be calculated using the formula:
Simple Interest = (Principal × Rate × Time) / 100.
Substituting the values: (8,000 × 5 × 4) / 100
= N1,600.

The rate of interest can be calculated using the formula:
Rate = (100 × Simple Interest) / (Principal × Time).
Since the amount doubles itself in 10 years, the simple interest is equal to the principal amount.
Therefore, Rate = (100 × 100) / (100 × 10)
= 8%.

Compound interest can be calculated using the formula:
Amount = Principal × (1 + Rate/100)^Time.
Substituting the values: 5,000 × (1 + 10/100)³
= N6,600.

Compound interest can be calculated using the formula:
Amount = Principal × (1 + Rate/100)^{(Time × Frequency).}
Here, the frequency is semi-annually,
so Time × Frequency = 2 × 2 = 4.
Substituting the values: 12,000 × (1 + 8/100)⁴
= N14,880.

Simple interest can be calculated using the formula:
Simple Interest = (Principal × Rate × Time) / 100.
Substituting the values: (Principal × 5 × 2) / 100
= 800.
Solving for Principal gives Principal = (800 × 100) / (5 × 2)
= N5,000.

The rate of interest can be calculated using the formula:
Rate = [(Amount - Principal) / Principal] × (100 / Time).
Substituting the values: [(7,500 - 6,000) / 6,000] × (100 / 2)
= 12%.

The number of years required for the amount to double can be calculated using the formula:
Time = (logarithm of 2 to the base (1 + Rate/100)) / (logarithm of 1 + Rate/100 to the base 10).
Substituting the values: (log2 / log(1 + 7/100)) ≈ 12.

Compound interest can be calculated using the formula:
Compound Interest = Principal × [(1 + Rate/100)^{Time - 1}].
Substituting the values: 10,000 × [(1 + 6/100)^{2 - 1}]
= N1,195.20.