Practice Set for Compound Interest

1. What sum of money lent at compound interest will amount to Rs. 968 in 2 years at 10% p.a. while interest charged annually? (ITI '81)
2. If the compound interest on a certain sum for two years at 10% p.a. is Rs. 2,100 the simple interest on it at the same rate for two years will be. ( RRB, 2009 )
3. A sum of money at compound interest amounts to thrice itself in three years. In how many years will it be nine time itself ? ( Bank PO, '91)
4. If Rs. 1,200 amounts to rs 1,323 in two years at compound interest, then what will be the amount of rs 1,600 in three years at compound interest at the same rate per cent ? (Bank PO, 2008)
5. A tree increases annually by 1/8th of its height. By how much will it increase after 2¹/₂ years, if it stands today 10 ft. high ? ( SSC 2007 )
6. Ravishankar borrowed Rs. 62,500 from a bank to purchase one Home Theatre System. If the rate of interest be 12% per annum compounded annually, what payment he will have to make after 2 years 3 months ? ( RBI , 2010)

Solution

A = P [ 1 + ^r/₁₀₀ ]ⁿ

968 = P [ 1+ ¹⁰/₁₀₀ ]² = 968 = P [ ¹²¹/₁₀₀ ] 

P = ^968×100/₁₂₁ 

CI = P [ 1+ ^r/₁₀₀ ]² - P

2100 = P [ 1+ ¹⁰/₁₀₀ ]² - P

2100 = P [ 121/100 ] - P

2100 = ^21P/₁₀₀

P = 10,000 , SI = 2,000

4.  1852.20

1323 = 1200 [ 1 + ^r/₁₀₀ ]³

⁴⁴¹/₁₀₀ = [²¹/₂₀]² = [1+^r/₁₀₀]²
R =5%

A = P [ 1+ ^r/₁₀₀ ]n 

A = 1600 [ ²¹/₂₀]³ = 1852.20

5. 3.77 ft. 
 Time = 21/2 years , R % = 1/8×100⇒25/2 %
A = P {[ 1+^R/₁₀₀ ]ⁿ× [ 1+^R/₁₀₀ ]}
A = P{[ 1+²⁵/_100×2 ]² × [ 1+ ²⁵/_100×2×2 ] }
A = 10×⁸¹/64×¹⁷/16
A = 13.77

6. 80752

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