Simple and Compound Interest - Exam Prep Shortcuts

Simple and Compound Interest - Shortcuts and Tricks

Q. A car travels 120 km at a speed of 60 km/h. How long does it take to complete the journey?

Solution

Time = Distance / Speed = 120 km / 60 km/h = 2 hours.

Correct Answer: B — 2 hours

Q. A loan of $8000 is taken at a simple interest rate of 7% per annum. What will be the total amount to be paid back after 4 years?

Solution

Total Amount = Principal + SI = 8000 + (8000 × 7 × 4 / 100) = 8000 + 2240 = $10240.

Correct Answer: B — $8800

Q. If a man can complete a work in 10 days and another in 15 days, how long will they take to complete the work together?

Solution

Work done in one day = 1/10 + 1/15 = 1/6. Therefore, they will complete the work in 6 days.

Correct Answer: B — 8 days

Q. If a person invests $5000 at a compound interest rate of 4% per annum, how much will he have after 3 years?

Solution

Amount = P(1 + r)^t = 5000(1 + 0.04)^3 = 5000(1.124864) = $5624.64.

Correct Answer: A — $5624.64

Q. If the principal amount is $1000 and the rate of interest is 5% per annum, what will be the simple interest for 3 years?

Solution

Simple Interest = Principal × Rate × Time / 100 = 1000 × 5 × 3 / 100 = $150.

Correct Answer: B — $100

Q. If the ratio of the principal to the total amount after 2 years at 10% compound interest is 1:1.21, what is the principal?

Solution

Let Principal = P. Then, P(1 + 0.10)^2 = 1.21P. Therefore, P = $1000.

Correct Answer: A — $1000

Q. What is the compound interest on $2000 at an interest rate of 6% per annum for 2 years?

Solution

Compound Interest = P(1 + r/n)^(nt) - P = 2000(1 + 0.06)^2 - 2000 = 2000(1.1236) - 2000 = $247.20.

Correct Answer: A — $252

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