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GMAT Simple & Compound Interest: related Quantitative Aptitude practice

The practice bank below covers broader Quantitative Aptitude topics; a dedicated Simple & Compound Interest lesson is not available yet.

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Quantitative Aptitude questions and exercises with answers

Showing questions 1–9 of 9.

Interest, in the banking sense, is best described as:Read the answer and worked solution →A sum of 10,000 is borrowed at 15% per annum simple interest for 2 years. The amount repayable is:Read the answer and worked solution →Find the simple interest on 15,000 at 5% per annum for 2 years.Read the answer and worked solution →Compound interest differs from simple interest because compound interest is calculated on:Read the answer and worked solution →20,000 is borrowed for 2 years at 8% compounded annually. The compound interest is:Read the answer and worked solution →For 10,000 at 10% per annum for 2 years, compound interest exceeds simple interest by:Read the answer and worked solution →Find the simple interest on 5,000 at 8% per annum for 3 years.Read the answer and worked solution →At simple interest, a sum doubles itself in 8 years. The annual rate is:Read the answer and worked solution →For the same principal, rate and a period of one year, compound interest compounded annually is:Read the answer and worked solution →

Worked practice questions

Interest, in the banking sense, is best described as:

  1. The extra money paid on money deposited or borrowed
  2. A fee charged for opening an account
  3. A tax collected by the government on savings
  4. The minimum balance a bank requires
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Correct answer: A. The extra money paid on money deposited or borrowed

1. Statements such as interest at 9 per cent per annum on a fixed deposit are familiar from any bank. 2. Interest is the extra money paid by institutions like banks or post offices on money deposited with them. 3. It also runs the other way: interest is paid by people when they borrow money. 4. So interest attaches to the sum involved, not to the account itself. 5. Account fees, taxes and minimum balances are separate charges and are not interest. _Source: syllabus Maths, Ch 7 'Comparing Quantities', S7.4 Compound Interest_

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A sum of 10,000 is borrowed at 15% per annum simple interest for 2 years. The amount repayable is:

  1. 13,000
  2. 11,500
  3. 12,250
  4. 13,225
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Correct answer: A. 13,000

1. Simple interest for one year is 15 per cent of 10000, which is 1500. 2. Under simple interest the yearly amount does not change, so 2 years give 1500 x 2 = 3000. 3. The amount repayable is principal plus interest. 4. That is 10000 + 3000 = 13000. 5. 13225 would be the compound interest answer, which is higher because interest then earns interest. _Source: syllabus Maths, Ch 7 'Comparing Quantities', S7.4 Compound Interest_

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Find the simple interest on 15,000 at 5% per annum for 2 years.

  1. 750
  2. 1,500
  3. 1,575
  4. 3,000
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Correct answer: B. 1,500

1. Simple interest uses the formula P x R x T / 100. 2. Here P = 15000, R = 5 and T = 2. 3. Interest for one year is 5 per cent of 15000 = 750. 4. Over 2 years that is 750 x 2 = 1500. 5. 1575 would be the compound interest figure, so picking it means compounding where the question asked for simple interest. _Source: syllabus Maths, Ch 7 'Comparing Quantities', S7.4 Compound Interest_

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More Quantitative Aptitude topics

ProbabilityPermutations and CombinationsAlgebraModern MathematicsQuantitative AptitudeData InterpretationAveragesInterest