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SIMPLE AND COMPOUND INTEREST

INTEREST 2. Find the amount to be paid back on a loan of
EXAMPLE
Interest is the fixed amount paid on borrowed money. ` 18,000 at 5.5% per annum for 3 years
The sum lent is called the Principal. Sol. P = ` 18000, R = 5.5%, T = 3 years
The sum of the principal and interest is called the Amount.
P R T 18000 5.5 3
Interest is of two kinds : S.I. = ` 2970
100 100
(i) Simple interest
(ii) Compound interest Amount = P + I = 18000 + 2970 = ` 20970
(i) Simple Interest : When interest is calculated on the original EXAMPLE 3. In how many years will a sum of money triple
principal for any length of time, it is called simple interest. itself, at 25% per annum simple interest.

Principal Time Rate Sol. Let the sum of money be ` P. So, A = 3P

Simple interest and S.I. = A P = 3P P = 2P
100
R = 25%
P R T
i.e. S.I.
100 100 S.I. 100 2P
T = 8 years
Amount = Principal + Interest P R P 25

PRT RT EXAMPLE 4. What rate per cent per annum will produce
i.e. A= P+ I P P 1
100 100 ` 250 as simple interest on ` 6000 in 2.5 years
Sol. P = ` 6000; Time (T) = 2.5 years; S.I. = ` 250
100 S.I.
Principal (P)
R T S.I. 100 250 100 10 5 2
Rate 1 %
P T 6000 2.5 6 3 3
100 S.I.
Rate (R)
T P EXAMPLE 5. To buy furniture for a new apartment, Sylvia
Chang borrowed `5000 at 11 % simple interest for 11 months.
100 S.I.
Time (T) How much interest will she pay?
P R
If rate of simple interest differs from year to year, then Sol. From the formula, I = Prt, with P = 5000, r = .11, and t = 11/12
(in years). The total interest she will pay is
(R1 R 2 R 3 .....) I = 5000 (.11) (11/12) = 504.17
S.I. P
100 or ` 504.17
EXAMPLE 1. Find the interest to be paid on a loan of ` 6000 (ii) Compound Interest : Money is said to be lent at compound
at 5% per year for 5 years interest when at the end of a year or other fixed period, the
Sol. P = ` 6000, R = 5% and T = 5 years interest that has become due is not paid to the lender, but is
P R T 6000 5 5 added to the sum lent, and the amount thus obtained becomes
S.I. = ` 1500 the principal in the next year or period. The process is repeated
100 100
until the amount for the last period has been found. Hence,
When the interest charged after a certain specified time
 2
period is added to form new principal for the next time period, n
4.5
the interest is said to be compounded and the total interest 10920.25 10000 1
100
accrued is compound interest.
n n
n 10920.25 0.9 20.9
r 1
C.I. P 1 1 ; 10000 20 20
100
n n 2 n
r 436.81 20.9 20.9 20.9
Amount (A) P 1 400 20
100 20 20
If rate of compound interest differs from year to year, then Hence ` 10000 will become `10920.25 in 2 years at 4.5%.
EXAMPLE 9. Suppose `1000 is deposited for 6 years in an
r1 r2 r3
Amount P 1 1 1 ....... account paying 8.31% per year compounded annually.
100 100 100
(a) Find the compound amount.
EXAMPLE 6. Find the compound interest on ` 70000 for 4 In the formula above, P = 1000, i = .0831, and n = 6.
years at the rate of 14% per annum compounded annually. The compound amount is
Sol. P = ` 70000, n = 4, r = 14% A = P (1 + i)n
r
n
14
4 A = 1000 (1.0831)6
A P 1 70000 1 = ` 118227.20 A = ` 1614.40.
100 100
C.I. = A P = 118227.20 70000 = ` 48227.20 (b) Find the amount of interest earned.
Subtract the initial deposit from the compound amount.
EXAMPLE 7. If ` 60000 amounts to ` 68694 in 2 years then
Amount of interest = `1614.40 ` 1000 = ` 614.40.
find the rate of interest.
Sol. Given : A = `68694 Compound interest when interest is compounded annually
P = ` 60000 but time is in fraction
n = 2 years
p
r=? If time = t years, then
q
n
r
A P 1
100
t p
r r
2 q
r A P 1 1
68694 60000 1 100 100
100

2 2
68694 r 11449 r
1 1 EXAMPLE 10. Find the compound interest on ` 8000 at 15%
60000 100 10000 100
per annum for 2 years 4 months, compound annually.
r 11449
1 1.1449 4 1
100 10000 Sol. Time = 2 years 4 months = 2 years = 2 years
12 3
r
1 1.07
100
1
r 2 15
1.07 1 0.07 15 3
100 Amount ` 8000 1 1
100 100
r = 0.07 100 = 7%

EXAMPLE 8. In how many years, the sum of ` 10000 will

23 23 21
become ` 10920.25 if the rate of compound interest is 4.5% per ` 8000 ` 11109
annum? 20 20 20
Sol. A = ` 10920.25 C.I. = ` (11109 8000) = ` 3109.
P = ` 10000
Rate of interest = 4.5%
Compound interest when interest is calculated half-yearly
Time (n) = ?
Since r is calculated half-yearly therefore the rate per cent will
n
r become half and the time period will become twice, i.e.,
A P 1
100
 3
When T = 3
r
Rate per cent when interest is paid half-yearly %
2 PR 2 300 R
(i) C.I. S.I. =
and time = 2 time given in years 104 100
Hence, 2
S.I. R R
(ii) C.I. S.I. = 3 3
r
2n 100 100
A P 1
2 100
EXAMPLE 13. The difference between compound interest and
EXAMPLE 11. What will be the compound interest on ` 4000 simple interest on a certain amount of money at 5% per annum
in 4 years at 8 per cent annum. If the interest is calculated half- for 2 years is ` 15. Find the sum :
yearly. (a) ` 4500 (b) ` 7500
Sol. Given : P = ` 4000, r = 8%, n = 4 years (c) ` 5000 (d) ` 6000
Since interest is calculated half-yearly, therefore, Sol. (d) Let the sum be ` 100.
8
r % 4% and n = 4 2 = 8 half years 100 5 2
2 Therefore, SI ` 10
100
8 8
4 26
A 4000 1 4000 2
100 25 5
and CI 100 1 100
= 4000 1.3685 = 5474.2762 100
Amount = ` 5474.28
Interest = Amount Principal 21 21 41
100 100 `
= ` 5474.28 ` 4000 = ` 1474.28 20 20 4
Compound interest when interest is calculated quarterly
41 1
Since 1 year has 4 quarters, therefore rate of interest will become Difference of CI and SI 10
4 4
1
th of the rate of interest per annum, and the time period will be
4 1
If the difference is , the sum = 100
4 times the time given in years 4
Hence, for quarterly interest
If the difference is ` 15, the sum
4 n 4n = 400 15 = ` 6000
r/4 r
A P 1 P 1
100 400 EXAMPLE 14. The difference between the simple interest
and the compound interest compounded annually at the rate of
EXAMPLE 12. Find the compound interest on ` 25625 for 12 12% per annum on ` 5000 for two years will be :
months at 16% per annum, compounded quarterly. (a) ` 47.50 (b) ` 63
Sol. Principal (P) = ` 25625
(c) ` 45 (d) ` 72
16
Rate (r) = 16% % 4% Sol. (d) Required difference
4
Time = 12 months = 4 quarters 2
12 5000 12 2
4 4
= 5000 1 5000
4 26 100 100
A 25625 1 25625
100 25

26 26 26 26 28 28
25625 = ` 29977.62 = 5000 1 1200
25 25 25 25 25 25
C.I. = A P = 29977.62 25625 = ` 4352.62
784 625
= 5000 1200 ` 72
Difference between Compound Interest and Simple Interest 625
When T = 2
2 EFFECTIVE RATE
R
(i) C.I. S.I. = P If ` 1 is deposited at 4% compounded quarterly, a calculator
100
can be used to find that at the end of one year, the compound
R S.I. amount is `1.0406, an increase of 4.06% over the original `1.
(ii) C.I. S.I. = The actual increase of 4.06% in the money is somewhat
2 100
 4
higher than the stated increase of 4%. To differentiate Let the value of each instalment = ` x
between these two numbers, 4% is called the nominal or Rate = r% and time = n years
stated rate of interest, while 4.06% is called the effective Then, Borrowed Amount
rate. To avoid confusion between stated rates and effective
rates, we shall continue to use r for the stated rate and we x x x
.....
will use re for the effective rate. r r
2
r
n
1 1 1
EXAMPLE 15. Find the effective rate corresponding to a 100 100 100
stated rate of 6% compounded semiannually. EXAMPLE 17. Subash purchased a refrigerator on the terms
Sol. A calculator shows that `100 at 6% compounded that he is required to pay `1,500 cash down payment followed by
semiannually will grow to ` 1,020 at the end of first year, ` 1,003 at the end of second year
2 and ` 990 at the end of third year. Interest is charged at the rate
.06
A 100 1 100 (1.03)2 $ 106.09 of 10% per annum. Calculate the cash price :
2
(a) ` 3,000 (b) ` 2,000
Thus, the actual amount of compound interest is (c) ` 4,000 (d) ` 5,000
`106.09 `100 = ` 6.09. Now if you earn `6.09 interest on Sol. (c) Cash down payment = ` 1500
`100 in 1 year with annual compounding, your rate is Let ` x becomes ` 1020 at the end of first year.
6.09/100 = .0609 = 6.09%.
Thus, the effective rate is re = 6.09%. 10
Then, 1020 x 1
100
In the preceding example we found the effective rate by
1020 100
dividing compound interest for 1 year by the original principal. or x ` 927.27
110
The same thing can be done with any principal P and rate r
compounded m times per year. 2
10
Similarly, 1003 y1
compound interest 100
Effective rate
principal
1003 20 20
or y ` 828.92
compound amount principal 22 22
re
principal 990 20 20 20
and z ` 743.80
22 22 22
m
r
m r Hence, CP = 1500 + 927.27 + 828.92 + 743.80
P 1 P P 1 1
m m = 3999.99 or ` 4000.
=
P P EXAMPLE 18. The difference between the interest received
from two different banks on ` 500 for 2 yrs is ` 2.5. Find the
m difference between their rates.
r
= re 1 1
m 500 2 r1
Sol. I 1 = = 10 r 1
100
EXAMPLE 16. A bank pays interest of 4.9% compounded
monthly. Find the effective rate. 500 2 r2
I2 = = 10 r2
Sol. Use the formula given above with r = .049 and m = 12. 100
I1 I2 = 10r 1 10r2= 2.5
12
.049 2.5
The effective rate is re 1 1 Or, I1 I2= = 0.25%
12 10
= 1.050115575 1 .0501 or 5.01% Examination method :
When t1= t2,
Id 100 2.5 100
Present worth of ` P due n years hence (r1 r2) = = 0.25%
sum t 500 2
P EXAMPLE 19. At what rate per cent compound interest does
Present worth = n
r a sum of money becomes nine - fold in 2 years?
1
100 Sol. Let the sum be ` x and the of compound interest be r% per
annum; then
Equal annual instalment to pay the borrowed amount
 5
2 2 1600 100 32
r r = = %
9x = x 1 or, 9 = 1 5 7000 7
100 100
ratio of two amounts = 2 : 5
r r
or, 3 = 1+ ; or, =2 6% 4%
100 100
r = 200%
Examination method :
The general formula of compound interest can be changed
to the following form : 32
%
If a certain sum becomes m times in t years, the rate of 7
1/ t
compound interest r is equal to 100 (m) 1

1/ t
In this case , r = 100 (9) 1
= 100 (3 1) = 200% 4 10
% %
EXAMPLE 20. The simple interest on a certain sum of money 7 7
at 4% per annum for 4 years is ` 80 more than the interest on 7000
the same sum for 3 years at 5% per annum. Find the sum. amount lent at 6 % = 2 = ` 2000
7
Sol. Let the sum be ` x, then at 4% rate for 4 years the simple
EXAMPLE 22. As n amount of money grows upto ` 4840 in
x 4 4 4x 2 years and upto ` 5324 in 3 years on compound interest. Find
Interest = `
100 25 the rate percent
At 5%rate for 3 yrs the simple interest Sol. We have,
x 5 3 3x P + CI of 3 yrs = ` 5324.......(1)
= =`
100 20 P + CI of 2yrs = ` 4840........(2)
Subtracting (2) from (1), we get
4x 3x
Now, we have , 80 CI of 3rd year = 5324 4840 = ` 484.
25 20
Thus, the CI calculated in the third year which is ` 484 is
16x 15x basically the amount of interest on the amount generated
or = 80 x = ` 8000
100 after 2 years which is ` 4840.
Examination Method :
484 100
For this type of question r= =10%
4840 1
Difference 100 80 100
Examination method :
Sum = [r2 t1 r2 t 2 ] 4 4 3 5 = ` 8000
Difference of amount after n years and (n 1) years 100
EXAMPLE 21. Some amount out of ` 7000 was lent at 6 % Amount after 2 years
per annum and the remaining at 4 % per annum. If the total In this, n = 2.
simple interest from both the fractions in 5 years was ` 1600,
find the sum lent at 6 % per annum. rate = Difference of amount after 2 years and 3 years 100
Amount after 2 years
Sol. Suppose ` x was lent at 6 % per annum.
x 6 5 (7000 x) 4 5 (5324 4840) 484 100
Thus, + = 1600 = 100 = = 10%
100 100 4840 4840

3x 7000 x EXAMPLE 23. A certain amount of money at compound

or, + = 1600 interest grows upto ` 51168 in 15 yrs and upto ` 51701 in 16
10 5
years. Find the rate per cent per annum.
3x 14, 000 2x
or, = 1600 (51701 51168) 100 533 100
10
Sol. Rate = =
x = 16000 14000 = ` 2000 51168 51168
By Method of Alligation : Overall rate of interest 100 25 1
= = =1 %
96 24 24
 6

EXAMPLE 24. Find the compound interest on ` 18,750 in 2 years the rate of interest being 4% for the first year and 8%
for the second year.
Sol. After first year the amount

4 104
= 18750 1 = 18750
100 100

104 108
After 2nd year the amount = 18750
100 100

26 27
= 18750 = 21060
25 25

CI = 21060 18,750 = ` 2310.

A computer gives the following results for various values of n.

n
1
Interest is n 1
n
compounded

1
Annually 1 1
1 2
1

2
Semiannually 2 1
1 2.25
2

4
1
Quarterly 4 1 2.4414
4

12
Monthly 12 1
1 2.6130
12

365
1
Daily 365 1 2.71457
365

8760
Hourly 8760 1
1 2.718127
8760

525,600
Every minute 525,600 1
1
2.7182792 525,600
31,536,600
1
1
Every second 31,536,000 31,536,000
2.7182818
 7

EXERCISE
1. Arun borrowed a sum of money from Jayant at the rate of and 15 p.c.p.a. respectively. If the total interest accrued in
8% per annum simple interest for the first four years, 10% one year was ` 3200 and the amount invested in scheme C
per annum for the next six years and 12% per annum for the was 150% of the amount invested in scheme A and 240% of
period beyond ten years. If he pays a total of ` 12,160 as the amount invested in scheme B, what was the amount
interest only at the end of 15 years, how much money did invested in scheme B?
he borrow? (a) ` 8000 (b) ` 5000
(a) ` 8000 (b) ` 10,000 (c) ` 6500 (d) Cannot be determined
(c) ` 12,000 (d) ` 9,000 (e) None of these
9. Aniket deposited two parts of a sum of ` 25000 in different
(e) None of these
banks at the rates of 15% per annum and 18% per annum
2. A sum fetched total simple interest of ` 4016.25 at the rate
respectively. In one year he got ` 4050 as the total interest.
of 9 p.c.p.a. in 5 years. What is the sum?
What was the amount deposited at the rate of 18% per
(a) ` 8925 (b) ` 8032.50
annum?
(c) `4462.50 (d) ` 8900
(a) ` 9000 (b) ` 18000
(e) None of these
(c) ` 15000 (d) Data inadequate
3. At a simple interest ` 800 becomes ` 956 in three years. If (e) None of these
the interest rate, is increased by 3%, how much would ` 800 10. Mr X invested an amount for 2 years @ 15 p.c.p.a at simple
become in three years? interest. Had the interest been compounded, he would have
(a) ` 1020.80 (b) ` 1004 earned ` 450/- more as interest. What was the amount
(c) ` 1028 (d) Data inadequate invested?
(e) None of these (a) ` 22000 (b) ` 24000
4. On ` 3,000 invested at a simple interest rate 6 p.c.p.a, (c) ` 25000 (d) Data inadequate
` 900 is obtained as interest in certain years. In order to (e) None of these
earn ` 1,600 as interest on ` 4,000 in the same number of 11. Difference between the compound interest and the simple
years, what should be the rate of simple interest? interest accrued on an amount of ` 18000, in two years was
(a) 7 p.c.p.a. (b) 8 p.c.p.a. ` 405. What was the rate of interest p.c.p.a?
(c) 9 p.c.p.a. (d) Data inadequate (a) 16 (b) 12
(e) None of these (c) 15 (d) Cannot be determined
5. A sum of money doubles itself in 10 years at simple interest. (e) None of these
In how many years would it treble itself? 12. Anish borrowed ` 15000 at the rate of 12% and an other
(a) 10 (b) 15 amount at the rate of 15% for two years. The total interest
(c) 20 (d) 25 paid by him was ` 9000. How much did he borrow?
(e) None of these (a) ` 32,000 (b) ` 33,000
6. A certain amount earns simple interest of `1750 after 7 (c) ` 30,000 (d) ` 35,000
years. Had the interest been 2% more, how much more (e) None of these
interest would it have earned? 13. The compound interest on any sum at the rate of 5% for
(a) ` 35 (b) ` 350 two years is ` 512.50. Find the sum.
(c) ` 245 (d) Cannot be determined (a) ` 5200 (b) ` 4800
(e) None of these (c) ` 5000 (d) ` 5500
7. What will be the difference in simple and compound interest (e) None of these
on ` 2000 after three years at the rate of 10 percent per 14. Mr Amin borrowed some money from Mr Vishwas. The rate
annum? of interest for first two years is 8% p.a., for the next three
(a) ` 160 (b) `42 years is 11 % p.a. and for the period beyond 5 years 14%
(c) ` 62 (d) ` 20 p.a. Mr Vishwas got an amount of `10920 as an interest at
(e) None of these the end of eight years. Then what amount was borrowed by
8. Nikhilesh invested certain amount in three different schemes Mr Amin?
A, B and C with the rate of interest 10 p.c.p.a., 12 p.c.p.a. (a) ` 12000 (b) ` 15000
 8
(c) ` 1400 (d) Data inadequate (a) 18 years (b) 24 years
(e) None of these (c) 30 years (d) 12 years
15. The C.I. on a certain sum of money for the 4th year at 8% (e) None of these
p.a. is ` 486. What was the compound interest for the third 24. Amal borrowed a sum of money with simple interest as per
year on the same sum at the same rate? the following rate structure:
(a) ` 450 (b) ` 475 1. 6 p.c. p.a. for the first three years
(c) ` 456 (d) ` 480 2. 8 p.c. p.a. for the next five years
(e) None of these 3. 12 p.c. p.a. for the next eight years
16. Seema invested an amount of ` 16000 for two years at
If he paid a total of ` 5,040 as interest at the end of twelve
compound interest and received an amount of ` 17640 on
maturity. What is the rate of interest? years, how much money did he borrow?
(a) 8 pcpa (b) 5 pcpa (a) ` 8,000 (b) ` 10,000
(c) 4 pcpa (d) Data inadequate (c) ` 12,000 (d) ` 6,000
(e) None of these (e) None of these
17. Amit Kumar invested an amount of ` 15,000 at compound 25. The simple interest in 14 months on a certain sum at the rate
interest rate of 10 pcpa for a period of two years. What of 6 per cent per annum is ` 250 more than the interest on
amount will he receive at the end of two years?
the same sum at the rate of 8 per cent in 8 months. How
(a) ` 18,000 (b) ` 18,500
(c) ` 17,000 (d) ` 17,500 much amount was borrowed?
(e) None of these (a) ` 15000 (b) ` 25000
18. In a business A and C invested amounts in the ratio 2:1. (c) ` 7500 (d) ` 14500
Whereas the ratio between amounts invested by A and B (e) None of these
was 3:2. If ` 1,57,300 was their profit, how much amount did 26. On retirement, a person gets 1.53 lakhs of his provident
B receive? fund which he invests in a scheme at 20% p.a. His monthly
(a) ` 72,600 (b) ` 48,400 income from this scheme will be
(c) ` 36,300 (d) ` 24,200
(a) ` 2, 450 (b) ` 2,500
(e) None of these
19. Mr. Sane invested a total amount of ` 16,500 for two years (c) ` 2, 550 (d) ` 2, 600
in two schemes A and B with rate of simple interest 10 (e) None of these
p.c.p.a. and 12 p.c.p.a. respectively. If the total amount of 27. A sum was put at simple interest at a certain rate for 4 years
interest earned was ` 3,620, what was the amount invested Had it been put at 2% higher rate, it would have fetched `
in scheme B? 56 more. Find the sum.
(a) ` 8,000 (b) ` 8,600 (a) ` 500 (b) ` 600
(c) ` 8,150 (d) Data inadequate (c) ` 700 (d) ` 800
(e) None of these
20. The difference between the simple and the compound (e) None of these
interest 28. Simple interest on a certain sum is 16 over 25 of the sum.
compounded every six months at the rate of 10% p.a. at the Find the rate per cent and time, if both are equal.
end of two years is `. 124.05. What is the sum? (a) 8% and 8 years (b) 6% and 6 years
(a) ` 10,000 (b) ` 6,000 (c) 10% and 10 years (d) 12 % and 12 years
(c) ` 12,000 (d) ` 8,000 (e) None of these
(e) None of these 29. The simple interest on ` 200 for 7 months at 5 paise per
21. Parameshwaran invested an amount of ` 12,000 at the simple
rupee per month is
interest rate of 10 pcpa and another amount at the simple
interest rate of 20 pcpa. The total interest earned at the end (a) ` 70 (b) ` 7
of one year on the total amount invested became 14 pcpa. (c) ` 35 (d) ` 30.50
Find the total amount invested. (e) None of these
(a) ` 22,000 (b) ` 25,000 30.
1
A tree increases annually by th of its height. By how
(c) ` 20,000 (d) ` 24,000 8
(e) None of these 1
much will it increase after 2 yearly, if it stands today 10ft
22. Raviraj invested an amount of ` 10,000 at compound interest 2
rate of 10 pcpa for a period of three years. How much amount high?
will Raviraj get after three years? (a) 3 ft (b) 3.27 ft
(a) ` 12,310 (b) ` 13,210 (c) 3.44 ft (d) 3.62 ft
(c) ` 13,320 (d) ` 13,120 (e) None of these
(e) None of these 31. If there are three sum of money P,Q and R so that P is the
23. A sum of money doubles itself in 6 years at a certain rate of simple interest on Q and Q is the simple interest of R, rate %
compound interest. In how many years will be 16 times at and time are same in each case, then the relation of P, Q and
the same rate of interest? R is given by
 9
(a) P2 = QR (b) Q2 = PR 1
2 40. The simple interest on a sum of money is th of the
(c) R = PQ (d) PQR = 100 16
(e) None of these principal and the number of years is equal to the rate per
32. In how many minimum number of complete years, the cent per annum. The rate per cent annum is ________ .
interest on ` 212.50 at 3% per annum will be in exact number 1 1
(a) 6 % (b) 6 %
of rupees? 4 3
(a) 6 (b) 8 1 1
(c) 6 % (d) 4 %
(c) 9 (d) 7 5 5
(e) None of these (e) None of these
33. A milk man borrowed ` 2,500 from two money lenders. For 41. An automobile financier claims to be lending money at simple
one loan, he paid 5% p.a. and for the other, he paid 7% p.a. interest, but he includes the interest every six months for
The total interest paid for two years was ` 275. How much calculating the principal. If he is charging an interest of
did he borrow at 7% rate? 10%, the effective rate of interest becomes :
(a) ` 600 (b) ` 625
(a) 10% (b) 10.25%
(c) ` 650 (d) ` 675
(c) 10.5% (d) None of these
(e) None of these
34. What annual instalment will discharge a debt of ` 4,200 due (e) None of these
in 5 years at 10% simple interest? 42. A lent ` 5000 to B for 2 years and ` 3000 to C for 4 years on
(a) ` 500 per year (b) ` 600 per year simple interest at the same rate of interest and received
(c) ` 700 per year (d) ` 800 per year ` 2200 in all from both of them as interest. The rate of interest
(e) None of these per annum is:
35. Aman borrows Rs 12,500 at 20% compound interest. At the (a) 5% (b) 7%
end of every year he pays Rs 2000 as part repayment. How 1
(c) 7 % (d) 10%
much does he still owe after three such instalments? 8
(a) Rs 12,000 (b) Rs 12,864 (e) None of these
(c) Rs 15,560 (d) None of these 43. A sum of ` 725 is lent in the beginning of a year at a certain
(e) None of these
rate of interest. After 8 months, a sum of ` 362.50 more is
36. A person borrows ` 5000 for 2 years at 4% p.a. simple
lent but at the rate twice the former. At the end of the year,
1 ` 33.50 is earned as interest from both the loans. What was
interest. He immediately lends it to another person at 6 %
4 the original rate of interest?
p.a. for 2 years. Find his gain in the transaction per year. (a) 3.6% (b) 4.5%
(a) ` 112.50 (b) ` 125 (c) 5% (d) 3.46%
(c) ` 150 (d) ` 167.50 (e) None of these
(e) None of these
44. The difference between the simple interest received from
37. A certain amount earns simple interest of ` 1750 after 7
two different sources on ` 1500 for 3 years is ` 13.50. The
years Had the interest been 2% more, how much more
interest would it have earned? difference between their rates of interest is:
(a) ` 35 (b) ` 245 (a) 0.1% (b) 0.2%
(c) ` 350 (d) Cannot be determined (c) 0.3% (d) 0.4%
(e) None of these (e) None of these
38. What will be the ratio of simple interest earned by certain 45. The rates of simple interest in two banks A and B are in the
amount at the same rate of interest for 6 years and that for
ratio 5 : 4. A person wants to deposit his total savings in
9 years?
(a) 1 : 3 (b) 1 : 4 two banks in such a way that he received equal half-yearly
(c) 2 : 3 (d) Data inadequate interest from both. He should deposit the savings in banks
(e) None of these A and B in the ratio.
39. Two equal sums of money were invested, one at 4% and (a) 2 : 5 (b) 4 : 5
the other at 4.5%. At the end of 7 years, the simple (c) 5 : 2 (d) 5 : 4
interest received from the latter exceeded to that received
(e) None of these
from the former by ` 31.50. Each sum was :
(a) ` 1,200 (b) ` 600 46. The price of a T.V. set worth ` 20,000 is to paid in 20
(c) ` 750 (d) ` 900 instalments of ` 1000 each. If the rate of interest be 6% per
(e) None of these annum, and the first instalment be paid at the time of
 10
purchase, then the value of the last instalment covering the 3
interest as well will be : p.a. If the total interest at the end of one year is 9 % , then
4
(a) ` 1050 (b) ` 2050 the amount invested in each share was:
(c) ` 3000 (d) None of these (a) ` 52,500; ` 47,500 (b) ` 62, 500; ` 37,500
(e) ` 2020
(c) ` 72,500: ` 27,500 (d) ` 82, 500; ` 17,500
47. A man buys a music system valued at ` 8000. He pays
` 3500 at once and the rest 18 months later, on which he is (e) None of these
49. Find the compound interest on ` 12450 for 9 months at 12%
charged simple interest at the rate of 8% per annum. Find
per annum compounded quarterly.
the total amount he pays for the music system. (a) ` 1154.45 (b) ` 1125.18
(a) ` 9260 (b) ` 8540 (c) ` 1198.72 (d) 1164.32
(c) ` 8720 (d) ` 9410 (e) None of these
(e) None of these 50. A person invested in all ` 2600 at 4%, 6% and 8% per annum
48. An amount of ` 1,00,000 is invested in two types of shares. simple interest. At the end of the year, he got the same
The first yields an interest of 9% p.a. and the second, 11% interest in all the three cases. The money invested at 4% is:
(a) ` 200 (b) ` 600
(c) ` 800 (d) ` 1200
(e) None of these
51. Divide ` 2379 into 3 parts so that their amounts after 2, 3
and 4 years respectively may be equal, the rate of interest
being 5% per annum at simple interest. The first part is:
(a) 759 (b) 792
(c) 818 (d) 828
(e) None of these

ANSWER KEY
1 (a) 7 (c) 13 (c) 19 (a) 25 (a) 31 (c) 37 (d) 43 (d) 49 (a)
2 (a) 8 (b) 14 (a) 20 (d) 26 (c) 32 (d) 38 (c) 44 (c) 50 (d)
3 (c) 9 (e) 15 (a) 21 (c) 27 (c) 33 (b) 39 (d) 45 (b) 51 (d)
4 (b) 10 (e) 16 (b) 22 (e) 28 (a) 34 (c) 40 (a) 46 (d)
5 (c) 11 (c) 17 (e) 23 (b) 29 (a) 35 (d) 41 (b) 47 (b)
6 (d) 12 (b) 18 (b) 24 (e) 30 (c) 36 (a) 42 (d) 48 (b)
 11

Answers &
Explanations
1. (a) Let the Principal = P
2000 10 10 310
` 62
P 8 4 P 10 6 P 12 5 100 100 100
Then
100 100 100 8. (b) Ratio of Nikhileshs investments in different schemes
= 12160
152P = 12160 100 150 100
100 : :150 8 : 5 :12
12160 100 240
or = ` 8000
152 Now, according to the question,
2. (a) Let the sums be ` P.
Now, 45% of P = 4016.25 8k 10 5k 12 12 k 15
3200
or, P = ` 8925 100 100 100
956 - 800 or, 80k + 60k + 180k = 3200 100
3. (c) Rate of interest = 100 = 6.50%
3800 or, 320k = 3200 100 or, k = 1000
800 9.5 3 amount invested in scheme B willl be
\ Amount = 800 + = 1000 5 = ` 5000
100
= 800 + 228 = `1028 9. (e) Let the amount deposited at the rate of 15% per annum
be ` x.
900 100
4. (b) Time = = 5 years 15% of x + 18% of (25000 x) = 4050
3000 6
or, 15% of x + 18% of 25000 18% of x = 4050
1600 100
Rate = = 8% or, 3% of x = 4500 4050 = 450 x = ` 15000
5 4000 \ Amount deposited at 18%
5. (c) S.I. in I case = 2P P = ` P = (25000 15000 =) ` 10000
P 100
R 10%
p 1 + 15 - p
2
P 10 30 p
+ 450 =
10. (e)
Now, S.I. in II case = 3P P = ` 2P 100

100
2P 100
T 20 years p = ` 20,000.
P 10
405 100 100
6. (d) Let p and r be the principal amount and rate of interest 11. (c) Rate % 15%
respectively. 18000

p r 7 12. (b) Let x be the other amount

Then, 1750
100 3x
or, pr = 25000 \ 3600 9000 x = `18000
10
p r 2 7 \ total borrowed sum = 33000
Now, SI =
100 13. (c) Let the sum be ` x.
We have to find the value of

5 = x 441 - 400
2
512.50 = x 1 +
p (r 2) 7 p r 7

-
400
1
100 100
= M 1750
100
M = SI when the rate of interest is 2% more. When we solve
this equation, we find that we have two variables and one
512.50 400
equation. Therefore, cant be determined the correct answer. \ x= = ` 5000
7. (c) For 3 years: 41

Sum (rate) 2 (300 rate) 14. (a) Let x be the amount borrowed by Mr Amin.
Diff.
(100)3 x 2 8 x 3 11 x 3 14
10920
100 100 100
 12

91 10920100 12000
10
+ x
20
= (12000 + x )
14
or, x = 10920 or x = = 12000
100 91 100 100 100
15. (a) If x be the interest of third year, then 108% of x= 486 x 7
or, 1200 + = 1680 + x
100 5 50
x 486 450
108
x 7
t 2 or, - x = 480
A r 17640 r 5 50
16. (b) 1 or, 1
P 100 16000 100 3
or, x = 480
21 r 50
20
1
100 \ x = ` 8000
\ Total amount invested ` = (12000 + 8000)
r = 5% = ` 20000
2
10 10 3
17. (e) Amount = 15000 1 (e) Amount = =10000 1+
100
100 22.

11 11 11 11 11
= 15000 = ` 18150 = 10000 = ` 13310
10 10 10 10 10
18. (b) Ratio A : B = 3 : 2 and A : C = 2 : 1 23. (b) P becomes 2P in 6 years at r% p.a.
\ A: B:C= 6:4:3 6
r
4 157300 2P P 1
Profit share of B = = ` 48400 100
13
6
19. (a) % interest on total amount per annum r
1 2
3620 100 362
100
= % 6 4 24
16500 33 r r
24 1 1
Now, use Alligation method. 100 100
P becomes 16 P in 24 years
Scheme Scheme
A B 24. (e) Let x be the amount Amal borrowed.
10% 12% 18% of x + 40% of x + 48% of x = 5040
or, 106% of x = 5040
362
% 5040
33 x 100 = ` 4754.71
106
25. (a) Let the amount be ` x.
362 362
12 10 x 14 6 x 8 8
33 33 From the question, 250
1200 1200
Hence, ratio of amount invested in schemes A and B x = ` 15000
26. (c) Let S.I. = ` x
362 362
= 12 : 10 17 :16 1.53 105 20
33 33
100
16 16500
Hence, amount invested in B = = ` 8000 27. (c) Difference in S.I. P T
17 16 (R1 R 2 )
100
20. (d) Let the sum be ` x.
P 4 2
4 56 ( R1 R2 = 2)
5 x 10 2 100
Then, x 1 x 124.05
100 100 56 100
P ` 700
Solving the above eqns, we get x = ` 8,000. 4 2
21. (c) Let the amount invested at 20% rate be ` x. According 16 P R R
to the question, 28. (a) P
25 100
 13
1600 40 2
R2 R 8% 20 20
25 5 2000 1 2000 1 2000
100 100
Also, time = 8 years
29. (a) Rate = 5 paise per rupee = 5% 6 6 6
` 12500
200 5 7 5 5 5
S.I. = ` 70
100 6 6 6
2000 2000 2000
1 5 5 5
30. (c) Increment 100 12 1 %
8 2
Hence, sum borrowed = ` 12,000.
5/ 2
25 36. (a) Gain in 2 years
H 10 1
100 2
25 2 5000 4 2
1
5/ 2
1
2
1
1/ 2 =` 5000
10 1 10 1 1 4 100 100
8 8 8
= ` (625 400) = ` 225.
2
9 1 10 81 17
10 1 13.44ft 225
8 2 8 64 16 Gain in 1 year = ` = ` 112.50
2
Q r t R r t
31. (b) P and Q 37. (d) We need to know the S.I., principal and time to find the
100 100
rate. Since the principal is not given, so data is
P Q r t
inadequate.
Q R 100 38. (c) Let the principal be P and rate of interest be R%.
Q2 = PR.
3 51 P R 6
32. (b) Interest for one year ` 212.50
1 `
100 8 100 6PR 6
Required ratio = 2 : 3.
Thus in 8 years, the interest is ` 51. P R 9 9PR 9
33. (b) Let he borrowed at 5% = ` x 100
he borrowed at 7% = ` (2500 x)
Now I1 + I2 = 275 39. (d) Difference of S.I. = ` 31.50
x 5 2 (2500 x) 7 2 Let each sum be ` x. Then
275
100 100
10x + 14 (2500 x) = 27500 1
x 4 7
4x = 35000 27500 = 7500 2 x 4 7
31.50
x = Rs 1875 100 100
Sum borrowed at 7% rate = 2500 1875 = ` 625
34. (c) Shortcut method : 7x 1 63
If borrowed amount be ` M and it is to be paid in equal or
instalments, then 100 2 2
or x = ` 900
ra n(n 1)
M na 40. (a) Let the rate of interest = r %
100 Y 2
times = r years
where Y = no. of instalments per annum
a = annual instalment S S r r
Now,
Here, M = 4200, y = 1, r = 10, n = 5, a = ? 16 100
10a 5(5 1)
4200 5a 100 25 1
100 2 or, r2 = r= 6 %
16 4 4
4200 a 5 1 6a 4200
41. (b) Let the sum be Rs 100. Then,
a = ` 700
35. (d) Balance 100 10 1
S.I. for first 6 months = ` ` 5.
3 100 2
20
` 12500 1
100
105 10 1
S.I. for last 6 months = ` ` 5.25.
100 2
So, amount at the end of 1 year = ` (100 + 5 + 5.25)
 14
= ` 110.25. 2x = (1100000 975000) = 125000 x = 62500.
Effective rate = ` (110.25 100) = 10.25%. Sum invested at 9% = ` 62500.
42. (d) Let the rate be R% p.a. Then, Sum invested at 11% = ` (100000 62500) = ` 37500.

5000 R 2 3000 R 4 9
2200 49. (a) P = ` 12450, n = 9 months yr,
100 100 12
R = 12% per annum
2200 4n 9
100R 120R 2200 R 10. R 12
4
12
220
A P 1 4 ` 12450 1 4
43. (d) Let the original rate be R%. Then, new rate = (2R)%. 100 100
725 R 1 362.50 2R 1 3
33.50 3 103
3
100 100 3 ` 12450 1 = ` 12450
100 100
(2175 725)R 33.50 100 3 10050 = ` 13604.45
CI = ` (13604.45 12450) = ` 1154.45
10050 50. (d) Let the parts be x, y and [2600 (x + y)]. Then,
R 3.46%
2900
x 4 1 y 6 1 [2600 (x y)] 8 1
1500 R1 3 1500 R 2 3 100 100 100
44. (c) 13.50
100 100 y 4 2 2
or y x.
x 6 3 3
1350
4500(R 1 R 2 ) 1350 R1 R 2 0.3% 5
4500 2600 x 8
45. (b) Let the savings be X and Y and the rates of simple So, x 4 1 3
100 100
interest be 5x and 4x respectively.
(7800 5x) 8
1 1 1 1 X 4 4x 52x (7800 8)
Then, X 5x Y 4x or , 3
2 100 2 100 Y 5
7800 8
i.e., X : Y = 4 : 5. x 1200.
46. (d) Money paid in cash = ` 1000. 52
Balance payment = ` (20000 1000) = ` 19000. Money invested at 4% = ` 1200.
47. (b) Cost of the music system = `8000
51. (d) Let the parts be x, y and z
Money paid at once = ` 3500 5 5
x x 2 y y 3
Money left = ` (8000 3500) = ` 4500 100 100
18 1 5
Time = yr 1 yr z z 4
12 2 100
Rate = 8% per annum

P T R 3 1 11x 23y 6z 10k 20k 5k

SI ` 4500 8 `540 k x ,y ,z
100 2 100 10 20 5 11 23 6
Money to be paid at the end = ` (4500 + 540) = ` 5040 But x + y +z = 2379.
Cost of music system = ` (3500 + 5040) = ` 8540 10k 20k 5k
48. (b) Let the sum invested at 9% be ` x and that invested at 2379
11 23 6
11% be ` (100000 x). 1380 k + 1320 k + 1256 k = 2379 11 23 6
Then,
2379 11 23 6 3 11 23 6
k
x 9 1 (100000 x) 11 1 3965 5
100 100
10 3 11 23 6
39 1 x 828.
100000 11 5
4 100 Hence, the first part is ` 828.
9x 1100000 11x 39000
9750
100 4