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ITBP Simple & Compound Interest — practice questions — page 2

Explore 33 free Simple & Compound Interest questions in ITBP Quantitative Aptitude. Open each question or exercise to read its content, reference answers and available explanation.

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Simple & Compound Interest questions and exercises with answers

Showing questions 31–33 of 33.

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

Find the simple interest on 5,000 at 8% per annum for 3 years.

  1. 1,000
  2. 1,200
  3. 1,300
  4. 1,400
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Correct answer: B. 1,200

1. Apply P x R x T / 100 with P = 5000, R = 8 and T = 3. 2. One year's interest is 8 per cent of 5000 = 400. 3. Over three years that is 400 x 3. 4. So the simple interest is 1200. 5. The amount repayable would be 5000 + 1200 = 6200, but the question asked only for the interest. _Source: syllabus Maths, Ch 7 'Comparing Quantities', S7.4 Compound Interest_

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At simple interest, a sum doubles itself in 8 years. The annual rate is:

  1. 8%
  2. 12.5%
  3. 10%
  4. 15%
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Correct answer: B. 12.5%

1. Doubling means the interest earned equals the original principal. 2. Take the principal as 100, so the interest over 8 years must also be 100. 3. Simple interest gives 100 x R x 8 / 100 = 100. 4. So 8R = 100, giving R = 12.5. 5. The rate is 12.5 per cent per annum. Note this only works for simple interest; under compounding the sum would double sooner. _Source: syllabus Maths, Ch 7 'Comparing Quantities', S7.4 Compound Interest_

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For the same principal, rate and a period of one year, compound interest compounded annually is:

  1. Always greater than simple interest
  2. Always less than simple interest
  3. Equal to simple interest
  4. Exactly double the simple interest
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Correct answer: C. Equal to simple interest

1. Compounding only bites when interest is charged on interest already added. 2. Over a single year no interest has yet been added to the principal. 3. So the base for the whole year is the original principal in both methods. 4. The two therefore give the same figure at the end of one year. 5. From the second year onward, compound interest pulls ahead because the base has grown. _Source: syllabus Maths, Ch 7 'Comparing Quantities', S7.4 Compound Interest_

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