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. A principal amount of $1200 is invested at a rate of 10% per annum for 3 years. What is the total amount after 3 years?
A.
$1500
B.
$1320
C.
$1440
D.
$1600
Show solution
Solution
Total Amount = P + SI = 1200 + (1200 * 0.10 * 3) = 1200 + 360 = $1440
Correct Answer:
C
— $1440
Learn More →
Q. A principal amount of $8000 is invested at a compound interest rate of 7% per annum. What will be the total amount after 3 years?
A.
$9784.00
B.
$9000.00
C.
$8500.00
D.
$9500.00
Show solution
Solution
Amount = P(1 + r)^n = 8000(1 + 0.07)^3 = 8000(1.225043) = $9800.34.
Correct Answer:
A
— $9784.00
Learn More →
Q. A principal of $2000 is invested at a compound interest rate of 5% per annum. What will be the total amount after 2 years?
A.
$2205.00
B.
$2100.00
C.
$2150.00
D.
$2250.00
Show solution
Solution
Amount = P(1 + r)^n = 2000(1 + 0.05)^2 = 2000(1.1025) = $2205.00.
Correct Answer:
A
— $2205.00
Learn More →
Q. A principal of $2000 is invested for 5 years at a simple interest rate of 3%. What is the total amount at the end of 5 years?
A.
$2300
B.
$2400
C.
$2500
D.
$2600
Show solution
Solution
Total Amount = P + Simple Interest = 2000 + (2000 * 0.03 * 5) = 2000 + 300 = 2300.
Correct Answer:
B
— $2400
Learn More →
Q. A sum of $1200 is invested at a rate of 6% per annum compounded annually. What will be the amount after 3 years?
A.
$1449.22
B.
$1350.00
C.
$1500.00
D.
$1600.00
Show solution
Solution
Amount = P(1 + r)^n = 1200(1 + 0.06)^3 = 1200(1.191016) = $1430.82.
Correct Answer:
A
— $1449.22
Learn More →
Q. A sum of $1500 is invested at a compound interest rate of 6% per annum. What will be the total amount after 3 years?
A.
$1785.00
B.
$1800.00
C.
$1890.00
D.
$2000.00
Show solution
Solution
Total Amount = P(1 + r/n)^(nt) = 1500(1 + 0.06/1)^(1*3) = 1500(1.191016) = 1786.52.
Correct Answer:
C
— $1890.00
Learn More →
Q. A sum of $1500 is invested at a compound interest rate of 7% per annum. What will be the amount after 1 year?
A.
$1605.00
B.
$1550.00
C.
$1575.00
D.
$1650.00
Show solution
Solution
Amount = P(1 + r)^n = 1500(1 + 0.07)^1 = 1500(1.07) = $1605.00.
Correct Answer:
A
— $1605.00
Learn More →
Q. A sum of $2000 is invested at a compound interest rate of 6% per annum. What will be the amount after 5 years?
A.
$2676.28
B.
$2500
C.
$2600
D.
$2700
Show solution
Solution
Amount = 2000(1 + 0.06)^5 = 2000(1.338225) = $2676.28.
Correct Answer:
A
— $2676.28
Learn More →
Q. A sum of $2500 is invested at a compound interest rate of 6% per annum. What will be the amount after 2 years?
A.
$2800
B.
$2650
C.
$2820
D.
$2750
Show solution
Solution
Amount = P(1 + r)^n = 2500(1 + 0.06)^2 = 2500(1.1236) = $2809.
Correct Answer:
C
— $2820
Learn More →
Q. A sum of $2500 is invested at a simple interest rate of 6% per annum. How much interest will be earned in 4 years?
A.
$300
B.
$400
C.
$500
D.
$600
Show solution
Solution
Simple Interest = P * r * t = 2500 * 0.06 * 4 = 600.
Correct Answer:
B
— $400
Learn More →
Q. A sum of $5000 is invested at a compound interest rate of 6% per annum. What will be the amount after 2 years?
A.
$5630
B.
$6000
C.
$5300
D.
$5500
Show solution
Solution
Amount = P(1 + r/n)^(nt) = 5000(1 + 0.06/1)^(1*2) = 5000(1.1236) = $5630
Correct Answer:
A
— $5630
Learn More →
Q. A sum of $8000 is invested at a rate of 6% per annum compounded annually. What will be the amount after 3 years?
A.
$9500
B.
$9000
C.
$9008
D.
$9006
Show solution
Solution
Amount = P(1 + r)^n = 8000(1 + 0.06)^3 = 8000(1.191016) = $9528.13.
Correct Answer:
C
— $9008
Learn More →
Q. A sum of money amounts to $1200 in 2 years at compound interest. If the rate of interest is 10% per annum, what was the principal?
A.
$1000
B.
$900
C.
$1100
D.
$950
Show solution
Solution
Let P be the principal. 1200 = P(1 + 0.10)^2 => P = 1200 / 1.21 = $991.74
Correct Answer:
A
— $1000
Learn More →
Q. A sum of money becomes $1200 in 3 years at simple interest. If the rate of interest is 5% per annum, what was the principal?
A.
$1000
B.
$1100
C.
$900
D.
$950
Show solution
Solution
Let the principal be P. Then, A = P + SI = P + (P × 0.05 × 3) = 1200. Solving gives P = $1000.
Correct Answer:
A
— $1000
Learn More →
Q. A sum of money doubles itself in 5 years at a certain rate of compound interest. What is the rate?
A.
14.87%
B.
15.00%
C.
12.00%
D.
10.00%
Show solution
Solution
Using the formula A = P(1 + r)^n, if A = 2P, then 2 = (1 + r)^5. Solving gives r ≈ 14.87%.
Correct Answer:
A
— 14.87%
Learn More →
Q. A sum of money doubles itself in 5 years at a certain rate of simple interest. What is the rate?
A.
10%
B.
12%
C.
15%
D.
20%
Show solution
Solution
If the principal doubles, SI = Principal. Rate = (SI / (Principal × Time)) × 100 = (Principal / (Principal × 5)) × 100 = 20%.
Correct Answer:
A
— 10%
Learn More →
Q. Calculate the compound interest on $2000 for 2 years at an interest rate of 8% per annum.
A.
$320
B.
$256
C.
$400
D.
$300
Show solution
Solution
Compound Interest = P(1 + r/n)^(nt) - P = 2000(1 + 0.08/1)^(1*2) - 2000 = 2000(1.1664) - 2000 = $256
Correct Answer:
B
— $256
Learn More →
Q. Calculate the compound interest on $5000 at 8% per annum for 3 years, compounded annually.
A.
$1,000
B.
$1,200
C.
$1,500
D.
$1,400
Show solution
Solution
Compound Interest = 5000(1 + 0.08)^3 - 5000 = 5000(1.259712) - 5000 = $1298.56
Correct Answer:
D
— $1,400
Learn More →
Q. If $1200 is invested at a compound interest rate of 8% per annum, what will be the amount after 2 years?
A.
$1400.00
B.
$1409.60
C.
$1450.00
D.
$1500.00
Show solution
Solution
Total Amount = 1200(1 + 0.08)^2 = 1200(1.1664) = 1399.68.
Correct Answer:
B
— $1409.60
Learn More →
Q. If $1200 is invested at a rate of 5% per annum compounded annually, what will be the total amount after 4 years?
A.
$1460
B.
$1464
C.
$1462
D.
$1450
Show solution
Solution
Amount = 1200(1 + 0.05)^4 = 1200(1.21550625) = $1458.61.
Correct Answer:
B
— $1464
Learn More →
Q. If $1500 is invested at a compound interest rate of 12% per annum, what will be the total amount after 1 year?
A.
$1680
B.
$1800
C.
$1700
D.
$1600
Show solution
Solution
Amount = P(1 + r) = 1500(1 + 0.12) = 1500(1.12) = $1680.
Correct Answer:
A
— $1680
Learn More →
Q. If $1500 is invested at a compound interest rate of 6% per annum, what will be the amount after 1 year?
A.
$1590
B.
$1580
C.
$1600
D.
$1550
Show solution
Solution
Amount = P(1 + r)^n = 1500(1 + 0.06)^1 = 1500(1.06) = $1590.
Correct Answer:
A
— $1590
Learn More →
Q. If $1500 is invested at a rate of 6% per annum, what will be the total amount after 5 years with compound interest?
A.
$2000
B.
$1800
C.
$2005
D.
$1950
Show solution
Solution
Total Amount = P(1 + r)^t = 1500(1 + 0.06)^5 = 1500(1.338225) = $2007.34
Correct Answer:
A
— $2000
Learn More →
Q. If $2000 is invested at a simple interest rate of 4% per annum, how much interest will be earned in 5 years?
A.
$400
B.
$300
C.
$200
D.
$500
Show solution
Solution
Simple Interest = Principal × Rate × Time = 2000 × 0.04 × 5 = $400.
Correct Answer:
A
— $400
Learn More →
Q. If a sum of money doubles in 10 years at simple interest, what is the rate of interest?
A.
10%
B.
5%
C.
20%
D.
15%
Show solution
Solution
If the amount doubles, SI = P. Rate = (SI / (P * t)) * 100 = (P / (P * 10)) * 100 = 10%
Correct Answer:
B
— 5%
Learn More →
Q. If a sum of money is invested at a simple interest rate of 7% per annum, how much interest will it earn in 6 years if the principal is $1200?
A.
$504
B.
$420
C.
$600
D.
$720
Show solution
Solution
Simple Interest = P * r * t = 1200 * 0.07 * 6 = $504
Correct Answer:
A
— $504
Learn More →
Q. If the compound interest on a sum of money for 2 years at 10% per annum is $220, what is the principal amount?
A.
$2000
B.
$1800
C.
$1500
D.
$2500
Show solution
Solution
Let the principal be P. Then, CI = P(1 + r)^n - P = P(1.1^2 - 1) = 220. Solving gives P = $2000.
Correct Answer:
A
— $2000
Learn More →
Q. If the compound interest on a sum of money for 3 years at 12% per annum is $500, what is the principal amount?
A.
$1500
B.
$1600
C.
$1700
D.
$1800
Show solution
Solution
Let the principal be P. Then, CI = P(1 + r)^n - P = P(1.12^3 - 1) = 500. Solving gives P = $1500.
Correct Answer:
A
— $1500
Learn More →
Q. If the simple interest on a sum of money for 3 years is $300 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
Learn More →
Q. If the simple interest on a sum of money is $1500 at a rate of 5% per annum for 6 years, what is the principal amount?
A.
$5000
B.
$6000
C.
$4500
D.
$4000
Show solution
Solution
Principal = SI / (r * t) = 1500 / (0.05 * 6) = $5000
Correct Answer:
A
— $5000
Learn More →
Showing 1 to 30 of 56 (2 Pages)
