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Arithmetic: Compound Interest Test -2

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Question 1

Find the total amount due when Rs. 2000 is compounded annually at the rate of 5% three years.

A

2305

B

2315

C

2405

D

2505

Question 1 Explanation:

Given values Principal=2000 Rate = 5% Time =3 years So the amount can be calculated using the formula: A = P (1+R/100)^{t} A = 2000(1+5/100)^{3} A = 2000(1+1/20)^{3} A = 2000 x 21/20 x 21/20 x 21/20 =Rs. 2315.25 Hence, option b is the right answe

Question 2

Meera got a Rs 4000 loan from Richa for a time period of 2 years 2 months and at a rate of 2% per annum. Find the amount paid by Meera to Richa as compound Interest.

A

4175

B

175

C

156

D

4235

Question 2 Explanation:

Since we have to find the compound interest We have the formula for amount when time given is in fractions is A = P (1+R/100)^{y}{1+ (m/12 X R/100)} Â where y is the number of years and m is the months So the amount is = 4000(1+2/100)^{2}{1+ (2/12 X 2/100)} = 4000(1+1/50)^{2}{1+ (1/6 X 1/50)} = 4000 x( 51/50 x 51/50){301/300} A = Rs 4175.30 Compound Interest= 4175 â€“ 4000 = Rs 175

Question 3

An amount of 7500 is invested in a compound interest scheme for 4 years. The rate of interest is 2% for the first year, 3 % for next 2 years, and for the last year, it is 4%. The final amount is:

A

8356.7

B

8557.45

C

8440

D

none

Question 3 Explanation:

It is a logical question Given values are Principal = 7500 Rate = 2%, 3%, 4% Time 4 years Since the rate is varying with respect to time so Amount for first year A =P(1+R/100) A = 7500(1+2/100) =Rs.7650 Therefore, this amount acts as the principal for the next two years and the rate for the next two years the rate is 3%, the amount will be A = 7650(1+3/100)^{2} = 8115.885 For the fourth year, the amount above acts as the principal. The rate of interest for the last year is 4%, therefore the final amount becomes: A=8115(1+4/100) = 8440

Question 4

The amount that a person would receive when he invest Rs.5600 at 4% rate for 1 year, compounded half yearly, is:

A

5789

B

5956

C

5826

D

6897

Question 4 Explanation:

For half yearly compounding, the formula is: A = P {(1+R/2)/ 100}^{2T} A = 5600{(1+4/100)^{2} A = 5600 x 51/50 x 51/50 =5826.24=Rs. 5826

Question 5

Find the compound interest on Rs. 4500 at 16% rate for 6 months compounded quarterly.

A

366.4

B

364.5

C

325.7

D

367.2

Question 5 Explanation:

For quarterly compound interest, the formula is: A = P {(1+R/4)/ 100}^{4T} A = 4500{(1+16/4) /100}^{4x6/12} A = 4500{(1+4/100}^{2} A = 4500{(1+1/25)}^{2} A = 4500 x 26/25 x 26/25=Rs 4867.2 So the compound interest will be 4867.2 â€“ 4000 = Rs 367.2

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