Simple & Compound Interest MCQ & Objective Questions
Understanding Simple & Compound Interest is crucial for students preparing for exams in India. This topic not only forms a significant part of the mathematics curriculum but also appears frequently in competitive exams. Practicing MCQs and objective questions on Simple & Compound Interest helps students grasp key concepts and enhances their problem-solving skills, leading to better scores in exams.
What You Will Practise Here
Definitions of Simple Interest and Compound Interest
Formulas for calculating Simple Interest and Compound Interest
Applications of Simple & Compound Interest in real-life scenarios
Difference between Simple Interest and Compound Interest
Time period and principal amount calculations
Understanding compound interest compounding frequency
Solving important Simple & Compound Interest questions for exams
Exam Relevance
Simple & Compound Interest is a vital topic in various examinations including CBSE, State Boards, NEET, and JEE. Students can expect questions that require them to apply formulas, interpret data, and solve problems based on real-life financial situations. Common question patterns include direct calculation problems, word problems, and comparative analysis between simple and compound interest scenarios.
Common Mistakes Students Make
Confusing the formulas for Simple Interest and Compound Interest
Overlooking the impact of compounding frequency on Compound Interest calculations
Failing to convert time periods into the correct units (years, months) when solving problems
Misunderstanding the concept of principal amount versus total amount
FAQs
Question: What is the formula for Simple Interest?Answer: The formula for Simple Interest is SI = (Principal × Rate × Time) / 100.
Question: How do I calculate Compound Interest?Answer: The formula for Compound Interest is CI = Principal × (1 + Rate/100)^Time - Principal.
Now is the time to enhance your understanding of Simple & Compound Interest! Dive into our practice MCQs and test your knowledge to excel in your exams. Remember, consistent practice is the key to success!
Q. If the simple interest on a sum of money is $240 in 4 years at a rate of 3% per annum, what is the principal amount?
A.
$2000
B.
$1800
C.
$1600
D.
$2200
Show solution
Solution
Simple Interest = P * r * t => P = SI / (r * t) = 240 / (0.03 * 4) = $2000
Correct Answer:
A
— $2000
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Q. If the simple interest on a sum of money is $300 after 3 years at a rate of 10% per annum, what is the principal?
A.
$1000
B.
$900
C.
$800
D.
$700
Show solution
Solution
SI = Principal × Rate × Time. 300 = Principal × 0.10 × 3. Principal = 300 / 0.30 = $1000.
Correct Answer:
A
— $1000
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Q. If the simple interest on a sum of money is $300 after 4 years at a rate of 5% per annum, what is the principal?
A.
$1500
B.
$1200
C.
$1000
D.
$900
Show solution
Solution
Simple Interest = Principal × Rate × Time, so Principal = SI / (Rate × Time) = 300 / (0.05 × 4) = $1500.
Correct Answer:
A
— $1500
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Q. If the simple interest on a sum of money is $300 in 3 years at a rate of 4% per annum, what is the principal amount?
A.
$2000
B.
$2500
C.
$3000
D.
$3500
Show solution
Solution
Simple Interest = P * r * t => 300 = P * 0.04 * 3 => P = 300 / (0.12) = 2500.
Correct Answer:
A
— $2000
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Q. If the total amount after 2 years is $1100 from a principal of $1000 at a compound interest rate of 5%, what is the interest earned?
A.
$100
B.
$110
C.
$120
D.
$150
Show solution
Solution
Interest Earned = Total Amount - Principal = 1100 - 1000 = 100.
Correct Answer:
A
— $100
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Q. What is the compound interest on $1500 at a rate of 12% per annum for 2 years?
A.
$360.00
B.
$400.00
C.
$450.00
D.
$500.00
Show solution
Solution
CI = P(1 + r)^n - P = 1500(1 + 0.12)^2 - 1500 = 1500(1.2544) - 1500 = $381.60.
Correct Answer:
A
— $360.00
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Q. What is the compound interest on a principal of $1000 at an annual interest rate of 5% for 2 years?
A.
$102.50
B.
$105.00
C.
$110.25
D.
$100.00
Show solution
Solution
Compound Interest = P(1 + r/n)^(nt) - P = 1000(1 + 0.05/1)^(1*2) - 1000 = 1000(1.1025) - 1000 = 102.50.
Correct Answer:
C
— $110.25
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Q. What is the compound interest on a principal of $1000 at an annual interest rate of 5% for 3 years?
A.
$157.63
B.
$150.00
C.
$100.00
D.
$115.76
Show solution
Solution
Compound Interest = P(1 + r/n)^(nt) - P = 1000(1 + 0.05/1)^(1*3) - 1000 = 1000(1.157625) - 1000 = $157.63
Correct Answer:
A
— $157.63
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Q. What is the compound interest on a principal of $5000 at an annual interest rate of 10% for 1 year?
A.
$500
B.
$550
C.
$600
D.
$650
Show solution
Solution
Compound Interest = P(1 + r/n)^(nt) - P = 5000(1 + 0.10/1)^(1*1) - 5000 = 5000(1.10) - 5000 = 500.
Correct Answer:
B
— $550
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Q. What is the difference between the compound interest and simple interest on a principal of $1000 at 8% per annum after 2 years?
A.
$16
B.
$32
C.
$24
D.
$20
Show solution
Solution
SI = 1000 × 0.08 × 2 = $160. CI = 1000(1 + 0.08)^2 - 1000 = 1000(1.1664) - 1000 = $166.40. Difference = $166.40 - $160 = $6.40.
Correct Answer:
B
— $32
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Q. What is the simple interest earned on a principal of $2500 at a rate of 3% per annum over 6 years?
A.
$450
B.
$300
C.
$600
D.
$500
Show solution
Solution
Simple Interest = Principal × Rate × Time = 2500 × 0.03 × 6 = $450.
Correct Answer:
A
— $450
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Q. What is the simple interest earned on a principal of $800 at a rate of 4% per annum over 5 years?
A.
$160
B.
$200
C.
$180
D.
$140
Show solution
Solution
Simple Interest = Principal × Rate × Time = 800 × 0.04 × 5 = $160.
Correct Answer:
A
— $160
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Q. What is the simple interest earned on a principal of $800 at a rate of 5% per annum over 4 years?
A.
$160
B.
$180
C.
$200
D.
$220
Show solution
Solution
Simple Interest = P * r * t = 800 * 0.05 * 4 = 160.
Correct Answer:
A
— $160
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Q. What is the simple interest on a principal of $1500 at a rate of 4% per annum for 5 years?
A.
$300
B.
$250
C.
$200
D.
$350
Show solution
Solution
Simple Interest = P * r * t = 1500 * 0.04 * 5 = $300
Correct Answer:
A
— $300
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Q. What is the simple interest on a principal of $5000 at a rate of 5% per annum for 3 years?
A.
$750
B.
$500
C.
$150
D.
$300
Show solution
Solution
Simple Interest = Principal × Rate × Time = 5000 × 0.05 × 3 = $750.
Correct Answer:
A
— $750
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Q. What is the simple interest on a principal of $800 at a rate of 4% per annum for 5 years?
A.
$160
B.
$200
C.
$180
D.
$140
Show solution
Solution
Simple Interest = Principal × Rate × Time = 800 × 0.04 × 5 = $160.
Correct Answer:
A
— $160
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Q. What is the simple interest on a principal of $800 at a rate of 4% per annum for 3 years?
A.
$96
B.
$80
C.
$72
D.
$64
Show solution
Solution
Simple Interest = P * r * t = 800 * 0.04 * 3 = $96
Correct Answer:
A
— $96
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Q. What is the total amount after 2 years if $1000 is invested at a compound interest rate of 5% per annum?
A.
$1100
B.
$1025
C.
$1050
D.
$1102.50
Show solution
Solution
Amount = 1000(1 + 0.05)^2 = 1000(1.1025) = $1102.50.
Correct Answer:
D
— $1102.50
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Q. What is the total amount after 3 years if $1000 is invested at a compound interest rate of 4% per annum?
A.
$1124.86
B.
$1100.00
C.
$1150.00
D.
$1200.00
Show solution
Solution
Amount = P(1 + r)^n = 1000(1 + 0.04)^3 = 1000(1.124864) = $1124.86.
Correct Answer:
A
— $1124.86
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Q. What is the total amount after 4 years if $1000 is invested at a compound interest rate of 8% per annum?
A.
$1366.08
B.
$1200.00
C.
$1400.00
D.
$1500.00
Show solution
Solution
Amount = P(1 + r)^n = 1000(1 + 0.08)^4 = 1000(1.36049) = $1366.08.
Correct Answer:
A
— $1366.08
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Q. What is the total amount after 4 years if $1000 is invested at a compound interest rate of 7% per annum?
A.
$1200
B.
$1204.49
C.
$1100
D.
$1150
Show solution
Solution
Total Amount = P(1 + r/n)^(nt) = 1000(1 + 0.07/1)^(1*4) = 1000(1.3107961) = $1310.80
Correct Answer:
B
— $1204.49
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Q. What will be the amount after 4 years if $2000 is invested at a compound interest rate of 5% per annum?
A.
$2400
B.
$2500
C.
$2200
D.
$2100
Show solution
Solution
Amount = P(1 + r)^t = 2000(1 + 0.05)^4 = 2000(1.21550625) = $2431.01
Correct Answer:
B
— $2500
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Q. What will be the compound interest on $1500 at 4% per annum after 3 years?
A.
$180
B.
$200
C.
$250
D.
$220
Show solution
Solution
CI = 1500(1 + 0.04)^3 - 1500 = 1500(1.124864) - 1500 = $187.30.
Correct Answer:
D
— $220
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Q. What will be the compound interest on $2000 at 5% per annum after 4 years?
A.
$400
B.
$500
C.
$600
D.
$800
Show solution
Solution
CI = P(1 + r)^n - P = 2000(1 + 0.05)^4 - 2000 = 2000(1.21550625) - 2000 = $430.61.
Correct Answer:
C
— $600
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Q. What will be the compound interest on $8000 at a rate of 12% per annum for 1 year?
A.
$960
B.
$800
C.
$720
D.
$600
Show solution
Solution
Compound Interest = P(1 + r/n)^(nt) - P = 8000(1 + 0.12/1)^(1*1) - 8000 = 8000(1.12) - 8000 = $960
Correct Answer:
A
— $960
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Q. What will be the total amount after 3 years if $2000 is invested at a compound interest rate of 7% per annum?
A.
$2400.00
B.
$2500.00
C.
$2600.00
D.
$2700.00
Show solution
Solution
Total Amount = 2000(1 + 0.07)^3 = 2000(1.225043) = 2450.09.
Correct Answer:
C
— $2600.00
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