Compound Interest questions with solutions

1. Question 1Easy

   Find the compound interest on Rs 6000 at 10% per annum for 2 years, compounded annually.

   • A.1560
   • B.1510
   • C.1260Correct
   • D.960
   • E.1010
   Show solution

   Amount = 6000(1+10/100)² = 7260.000000000001. Compound interest = 7260.000000000001 − 6000 = 1260.000000000001.

2. Question 2Easy

   Find the compound interest on Rs 8000 at 20% per annum for 2 years, compounded annually.

   • A.3120
   • B.3920
   • C.3520Correct
   • D.2820
   • E.4220
   Show solution

   Amount = 8000(1+20/100)² = 11520. Compound interest = 11520 − 8000 = 3520.

3. Question 3Moderate

   What is the compound interest on Rs 8000 at 10% per annum for 2 years, compounded annually?

   • A.Rs 1600
   • B.Rs 1640
   • C.Rs 1680Correct
   • D.Rs 1720
   • E.Rs 1760
   Show solution

   Over two years at 10%, the amount is 8000 x 1.1 x 1.1 = 9680, so the interest is 9680 - 8000 = 1680. Equivalently, the two-year rate is 10 + 10 + (10 x 10)/100 = 21%, and 21% of 8000 is 1680.

4. Question 4Moderate

   Find the compound interest on Rupees 12,000 at 10% per annum for 2 years, compounded annually.

   • A.Rupees 2,400
   • B.Rupees 2,520Correct
   • C.Rupees 2,640
   • D.Rupees 2,760
   • E.Rupees 2,880
   Show solution

   The amount is 12000 x 1.1 x 1.1 = 14520, so the interest is 2520. There is a faster route for two years: compound interest equals simple interest plus interest on the first year's interest. Simple interest is 1200 a year, so 2400, and 10% of the first year's 1200 adds 120, giving 2520. Option A is the simple interest, offered because the difference between the two is exactly what this question tests.

5. Question 5Moderate

   Find the compound interest on Rs 8000 at 10% per annum for 2 years, compounded annually.

   • A.Rs 1600
   • B.Rs 1680Correct
   • C.Rs 1760
   • D.Rs 1800
   • E.Rs 1860
   Show solution

   The amount after 2 years is 8000 x 1.10 x 1.10 = 8000 x 1.21 = 9680. The compound interest is 9680 - 8000 = 1680. For 2 years there is a shortcut: interest equals principal times (r + r + r squared / 100) / 100, which also gives 1680.

6. Question 6Moderate

   Find the difference between the compound interest and the simple interest on Rupees 20,000 at 10% per annum for 2 years, compounded annually.

   • A.Rupees 180
   • B.Rupees 200Correct
   • C.Rupees 210
   • D.Rupees 220
   • E.Rupees 240
   Show solution

   Simple interest = 20000 x 10 x 2 / 100 = 2000 x 2 = 4000. For compound interest, the amount is 20000 x 1.1 x 1.1 = 24200, so the interest is 4200. The difference is 200. There is a shortcut worth memorising: for 2 years the difference is P x r squared over 100 squared, which here is 20000 x 100 / 10000 = 200.

7. Question 7Moderate

   Find the amount on Rs 6250 at 8% per annum, compounded annually, for 2 years.

   • A.7300
   • B.7200
   • C.7250
   • D.7290Correct
   Show solution

   Amount = 6250 × (1.08)² = 6250 × 1.1664 = 7290.

8. Question 8Moderate

   Find the compound interest on Rs 2000 at 20% per annum for 2 years, compounded annually.

   • A.635
   • B.810
   • C.950
   • D.1125
   • E.880Correct
   Show solution

   Amount = 2000(1+20/100)² = 2880. Compound interest = 2880 − 2000 = 880.

9. Question 9Moderate

   Find the compound interest on Rs 12000 at 20% per annum for 2 years, compounded annually.

   • A.6480
   • B.5280Correct
   • C.4980
   • D.5580
   • E.4080
   Show solution

   Amount = 12000(1+20/100)² = 17280. Compound interest = 17280 − 12000 = 5280.

10. Question 10Moderate

    Find the compound interest on Rs 2000 at 5% per annum for 2 years, compounded annually.

    • A.165
    • B.205Correct
    • C.255
    • D.155
    • E.245
    Show solution

    Amount = 2000(1+5/100)² = 2205. Compound interest = 2205 − 2000 = 205.

11. Question 11Moderate

    Find the compound interest on Rs 8000 at 10% per annum for 2 years.

    • A.1680Correct
    • B.1700
    • C.1600
    • D.1650
    Show solution

    Amount = 8000 × (1.1)² = 8000 × 1.21 = 9680, so the compound interest is 9680 − 8000 = 1680.

12. Question 12Moderate

    Find the compound interest on Rs 5000 at 10% per annum for 2 years.

    • A.1100
    • B.1000
    • C.1025
    • D.1050Correct
    Show solution

    Amount = 5000 × 1.21 = 6050, so CI = 6050 − 5000 = 1050.

These are 12 of 19 compound interest questions in the bank. Attempt the rest with instant feedback in the practice drills, or under a clock in the mock tests.