Sample Previous Year Questions: Simple Interest and Compound Interest | Quantitative for GMAT PDF Download

Q1. A principal of $9,000 is invested at an annual interest rate of 5%, compounded quarterly. What is the interest earned after 1 year?
A) $450
B) $456
C) $461
D) $459
E) $471

Ans: D) $459

Explanation:

Q2.  A principal of $3,000 grows to $3,499.20 after 2 years at an annual compound interest rate, compounded annually. What is the annual interest rate?
A) 6%
B) 7%
C) 8%
D) 9%
E) 10%

Ans: C) 8%

Explanation:

Q3. A sum of $20,000 is invested at a simple interest rate of 3% per year. What is the total amount (principal + interest) after 4 years?
A) $21,200
B) $22,000
C) $22,400
D) $22,800
E) $23,200

Ans: C) $22,400

Explanation:

Q4. An investment earns $1,800 in simple interest over 3 years at an annual rate of 4%. What was the principal amount?
A) $13,000
B) $14,000
C) $15,000
D) $16,000
E) $17,000

Ans: C) $15,000

Explanation:

Q5. A principal of $8,000 is invested at an annual interest rate of 6.15%, compounded once per year. What is the interest earned after 1 year?
A) $480
B) $486
C) $489
D) $492
E) $495

Ans: D) $492

Explanation:

Q6. A $4,000 principal grows to $4,764.06 at 6% compound interest, compounded annually. How many years did it take?
A) 2
B) 3
C) 4
D) 5
E) 6

Ans: B) 3

Explanation:

Q7. Jane invested a sum in a bank that paid simple interest. The amount grew to $360 after 2 years, and she received $540 after 5 more years. What was the principal amount?
A) $257
B) $246
C) $288
D) $320
E) $472

Ans: C) $288

Explanation:

Q8. Mark invested $8,000 for 2 years at 5% interest. One account used simple interest, the other compound interest annually. How much more interest from the compound?
A) $20
B) $25
C) $30
D) $35
E) $40

Ans: A) $20

Explanation: