IBPS PO Quantitative Aptitude: Compound Interest questions with solutions

Q1. A bank offers 5% compound interest calculated on a half-yearly basis. A customer deposits Rs. 1600 each on 1st January and 1st July of a year. At the end of the year, the amount of interest earned is:

1. Rs. 120
2. Rs. 121
3. Rs. 122
4. Rs. 123

Answer: Rs. 121

At 5% p.a. compounded half-yearly, the rate per half-year is 2.5%. The Rs. 1600 deposited on 1st January becomes 1600(1.025)^2 = 1681, and the Rs. 1600 deposited on 1st July becomes 1600(1.025) = 1640. Total interest = (1681 + 1640) - 3200 = 121.

Q2. The difference between simple and compound interest, compounded annually, on a certain sum of money for 2 years at 4% per annum is Re. 1. The sum (in Rs.) is:

1. 625
2. 630
3. 640
4. 650

Answer: 625

For 2 years, CI - SI = P(r/100)^2. Here, 1 = P(4/100)^2 = P/625, so P = 625.

Q3. There is a 60% increase in an amount in 6 years at simple interest. What will be the compound interest on Rs. 12,000 after 3 years at the same rate?

1. Rs. 2160
2. Rs. 3120
3. Rs. 3972
4. Rs. 6240

Answer: Rs. 3972

A 60% increase in 6 years at simple interest means the rate is 10% per annum. Then CI on Rs. 12,000 for 3 years at 10% is 12000[(1.1)^3 - 1] = 3972.

Q4. What is the difference between the compound interests on Rs. 5000 for 1 year at 4% per annum compounded yearly and half-yearly?

1. Rs. 2.04
2. Rs. 3.06
3. Rs. 4.80
4. Rs. 8.30

Answer: Rs. 2.04

Yearly CI for 1 year at 4% on Rs. 5000 is Rs. 200. Half-yearly CI is 5000[(1.02)^2 - 1] = Rs. 202. The difference is Rs. 2.04.

Q5. The compound interest on Rs. 30,000 at 7% per annum is Rs. 4347. The period (in years) is:

1. 2
2. 2 1/2
3. 3
4. 4

Answer: 2

If CI = 4347, then amount = 30000 + 4347 = 34347. Now 30000(1.07)^2 = 34347, so the time is 2 years.