Quants 25 - Interest

Practice Questions:

Question 1:

` 1200 is lent out at 5% per annum simple interest for 3 years. Find the amount after 3 years.

The annual interest would be ` 60 (PNR/100 = (1200*1*5)/100). 

After 3 years the total value would be 1200 + 60 × 3 = 1380.

Question 2:

Interest obtained on a sum of ` 5000 for 3 years is ` 1500. Find the rate percent.

The interest earned per year would be 1500/3=500. This represents a 10% rate of interest.

SI = PNR/100 => 1500 = (5000 x 3 x R)/100 => R = 1500 x 100 / ( 5000 x 3 ) = 10%.

Question 3:

` 2100 is lent at compound interest of 5% per annum for 2 years. Find the amount after two years.

2100 + 5% of 2100 = 2100 + 105 = 2205 (after 1 year). 

Next year it would become:
2205 + 5% of 2205 = 2205 +110.25 = 2315.25

Question 4:

Find the difference between the simple and the compound interest at 5% per annum for 2 years on a principal of ` 2000.

Simple Interest for 2 years = 100 + 100 = 200.
Compound interest for 2 years: 

Year 1 = 5% of 2000 = 100.
Year 2: 5% of 2100 = 105 Æ Total compound interest = ` 205.
Difference between the Simple and Compound interest = 205 – 200 = ` 5

Question 5:

After how many years will a sum of ` 12,500 become ` 17,500 at the rate of 10% per annum?

12500 @ 10% simple interest would give an interest of ` 1250 per annum. For a total interest of ` 5000, it would take 4 years.

Time to Think:

Find the rate of interest if the amount after 2 years of simple interest on a capital of ` 1200 is ` 1440.