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Test: Compound Interest- 1 - UPSC MCQ


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10 Questions MCQ Test CSAT Preparation - Test: Compound Interest- 1

Test: Compound Interest- 1 for UPSC 2025 is part of CSAT Preparation preparation. The Test: Compound Interest- 1 questions and answers have been prepared according to the UPSC exam syllabus.The Test: Compound Interest- 1 MCQs are made for UPSC 2025 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Compound Interest- 1 below.
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Test: Compound Interest- 1 - Question 1
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Q. What is the difference between the compound interests on Rs. 5000 for 11/2  years at 4 percent per annum compounded yearly and half yearly?

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Test: Compound Interest- 1 - Question 2
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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: 

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Test: Compound Interest- 1 - Question 3
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There is 80% increase in an amount in 8 years at simple interest. What will be the compound interest of Rs. 14,000 after 3 years at the same rate? 

Detailed Solution for Test: Compound Interest- 1 - Question 3

Simple interest = P * r * t /100, where, P is the Principal, r is the rate of interest and t is the time period such that the rate of interest and the time period have mutually compatible units like r % per annum and t years.

Here, in the first case, let the Principal be Rs.P and rate of interest be r % per annum. Time period is given as 8 years . Interest is given as 80 P / 100
So, 80 P / 100 = P * r * 8 / 100
Or, 80 = 8 r
So, r = 10 % per annum.

Now, in the second case, Principal is given as Rs. 14,000, rate of compound interest is 10 % per annum as determined above; and t is 3 years.
Compound interest = P * ( 1 + r/100)t - P 
= 14,000 * ( 1+ 10 /100)3 - 14,000
= 14,000 * ( 1 + 0.1)3 - 14,000
= 14,000 *(1.1)3 - 14,000
(14,000 * 1.331) - 14,000
= 18,634 - 14,000 = 4,634
So, the compound interest on Rs.14,000 at the same rate of interest as in case 1 in 3 years will be Rs. 4,634.

Test: Compound Interest- 1 - Question 4
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The compound interest on Rs. 30,000 at 7% per annum is Rs. 4347. The period (in years) is: 
Detailed Solution for Test: Compound Interest- 1 - Question 4

Amount = Rs.(30000+4347) = Rs.34347
let the time be n years
Then,30000(1+7/100)n = 34347
(107/100)n = 34347/30000 
= 11449/10000 
= (107/100)2
n = 2years

Test: Compound Interest- 1 - Question 5
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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 is: 
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Test: Compound Interest- 1 - Question 6
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The difference between compound interest and simple interest on an amount of Rs. 15,000 for 2 years is Rs. 96. What is the rate of interest per annum? 
Detailed Solution for Test: Compound Interest- 1 - Question 6

Let the rate of interest be R% per annum.
Simple Interest (SI) for 2 years:
SI = Principal × Rate × Time / 100
= 15000 × R × 2 / 100
= 300R
Compound Interest (CI) for 2 years:
CI = Principal × [(1 + R/100)2 – 1]
= 15000 × [(1 + R/100)2 – 1]
Difference = CI – SI = Rs. 96
So,
15000 × [(1 + R/100)2 – 1] – 300R = 96
=> 15000 × [(1 + 2R/100 + (R/100)2) – 1] – 300R = 96
=> 15000 × [2R/100 + (R2/10000)] – 300R = 96
=> 15000 × (2R/100) + 15000 × (R2/10000) – 300R = 96
=> 300R + (15000 × R2)/10000 – 300R = 96
=> (15000 × R2)/10000 = 96
=> (3/2)R2 = 96
=> R2 = 96 × (2/3) = 64
=> R = 8%
Therefore, the correct rate of interest per annum is 8%.

Test: Compound Interest- 1 - Question 7
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If the simple interest on a sum of money for 2 years at 5% per annum is Rs. 60, what is the compound interest on the same at the same rate and for the same time? 
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Test: Compound Interest- 1 - Question 8
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The difference between simple interest and compound on Rs. 900 for one year at 10% per annum reckoned half-yearly is: 
Detailed Solution for Test: Compound Interest- 1 - Question 8
To find the difference between simple interest (SI) and compound interest (CI) on Rs. 900 for one year at 10% per annum, reckoned half-yearly: 1. Simple Interest Calculation: SI = P * R * T / 100 = 900 * 10 * 1 / 100 = Rs. 90 2. Compound Interest Calculation: A = P(1 + r/n)^(nt) Substituting the values: A = 900(1 + 0.10/2)^(2*1) = 900(1.05)2 ≈ 992.25 The compound interest (CI) is: CI = A - P = 992.25 - 900 = Rs. 92.25 3. Difference between Compound Interest and Simple Interest: Difference = CI - SI = 92.25 - 90 = Rs. 2.25 Thus, the correct answer is B. Rs. 2.25.
Test: Compound Interest- 1 - Question 9
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What will be the compound interest on a sum of Rs. 40,000 after 3 years at the rate of 11 p.c.p.a.? 
Detailed Solution for Test: Compound Interest- 1 - Question 9

Amount after 3 years = P(1 + R/100)T
=> 40000(1 + 11/100)3
=> 40000(111/100)3
=> 40000[(111*111*111)/(100*100*100)]
=> (4*111*111*111)/100 
=> 54705.24
Compound Interest = 54705.24 - 40000 
= Rs. 14705.24

Test: Compound Interest- 1 - Question 10
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At what rate of compound interest per annum will a sum of Rs. 1400 become Rs. 1573.04 in 2 years? 
Detailed Solution for Test: Compound Interest- 1 - Question 10

Let the rate be R% per annum
P(1+R/100)T = 1573.04
= 1400(1+R/100)2 = 1573.04
= (1+R/100)2 = 1573.04/1400 = 157304/140000 = 11236/10000
(1+R/100) = (√11236/10000)
= (√11236)/(√10000)
= 106/100
R/100 = (106/100 − 1)
=> 6/100
R = 6%

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