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Simple Compound Interest MCQs
High-yield multiple choice questions asked in previous years (UPSC, SSC CGL, JKSSB, RRB & State PSCs).
High-Yield Concept Capsule & Key Facts
📌 High-scoring commercial arithmetic segment in Banking PO/Clerk, SSC CGL/CHSL, and State PSCs.
Simple Interest (SI) Principles
- • Fundamental SI Formula: SI = (P × R × T) / 100. Total Amount A = P + SI = P[1 + (RT/100)].
- • Constant Interest Principle: In Simple Interest, interest earned remains exactly identical in every successive year because interest is calculated strictly on the initial Principal (P).
- • Sum Multiplying Itself: If a sum becomes 'n' times itself in 'T' years at simple interest, the rate of interest is R = [(n - 1) / T] × 100%.
Compound Interest (CI) & CI-SI Differences
- • Compounding Formula: Amount A = P [1 + (R/100)]^T. When compounded half-yearly: Rate = R/2, Time = 2T. When compounded quarterly: Rate = R/4, Time = 4T.
- • Difference between CI and SI for 2 Years: Difference (D) = P (R / 100)^2.
- • Difference between CI and SI for 3 Years: Difference (D) = P (R / 100)^2 × [(300 + R) / 100].
- • Successive Percentage Rule: Effective CI rate for 2 years at R% = 2R + (R^2 / 100)%.
| Concept | Mathematical Formula | Exam Shortcut Technique |
|---|---|---|
| Simple Interest (SI) | SI = (P × R × T) / 100 | Linear arithmetic progression every year |
| Compound Interest (CI) | A = P(1 + R/100)^T | Use successive rate: R + R + R^2/100 |
| 2-Year CI - SI Diff | Diff = P (R / 100)^2 | Direct single-step formula for P or R |
| 3-Year CI - SI Diff | Diff = P (R/100)^2 (300 + R)/100 | Avoids long manual calculations |
| Half-Yearly Compounding | R' = R/2, T' = 2T | Compound twice per year at half rate |
Showing 15 Practice Questions
Q1SSC CGL 2023Easy
What will be the compound interest on a sum of Rs. 10,000 for 2 years at 10% per annum compounded annually?
Q2IBPS PO 2022Easy
The difference between simple and compound interests compounded annually on a certain sum of money for 2 years at 5% per annum is Rs. 25. What is the principal sum?
Q3JKSSB FAA 2022Easy
At what rate of simple interest per annum will a sum of money double itself in 8 years?
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Q4CDS 2022Easy
A sum of money placed at compound interest doubles itself in 4 years. In how many years will it amount to 8 times itself at the same rate?
Q5JKSSB VLW 2023Easy
Find the simple interest on Rs. 7,200 at 8% per annum for 9 months.
Q6SSC CGL Tier-1Easy
What is the compound interest on Rs. 8,000 for 1 year at 10% per annum, compounded half-yearly?
Q7JKPSC KAS PrelimsEasy
A sum of money invested at simple interest amounts to Rs. 815 in 3 years and to Rs. 854 in 4 years. The principal sum is:
Q8NDA 2022Medium
The difference between simple interest and compound interest on Rs. 5,000 for 3 years at 10% per annum is:
Q9SSC CHSLEasy
At what rate percent per annum will Rs. 2,000 amount to Rs. 2,420 in 2 years at compound interest?
Q10JKSSB Sub-InspectorEasy
A sum of money amounts to Rs. 1,331 in 3 years at 10% compound interest per annum. What was the original sum invested?
Q11UPSC CSATEasy
If the simple interest on a certain sum for 2 years at 4% is Rs. 80, what would be the compound interest on the same sum at the same rate and for the same period?
Q12JKSSB Patwari 2024Easy
A sum was put at simple interest at a certain rate for 3 years. Had it been put at 2% higher rate, it would have fetched Rs. 360 more. The sum is:
Q13CDS 2021Easy
A person borrows Rs. 5,000 for 2 years at 4% per annum simple interest. He immediately lends it to another person at 6.25% p.a. for 2 years. His gain in the transaction per year is:
Q14SSC CGLEasy
The population of a town increases by 5% annually. If its present population is 80,000, what will be its population after 2 years?
Q15JKSSB Junior AssistantEasy
In how many years will Rs. 1,000 become Rs. 1,331 at 20% per annum, compounded half-yearly?
Frequently Asked Questions (Simple Compound Interest)
Q: What is the direct shortcut formula to find the difference between CI and SI for 2 years?
The difference (D) between Compound Interest and Simple Interest on a principal sum P at an annual interest rate R% for 2 years is given by the formula: Difference = P × (R / 100)^2.
Q: If a sum of money doubles itself in 5 years at simple interest, what is the rate of interest?
Using the multiplier formula R = [(n - 1) / T] × 100: here n = 2 and T = 5 years. R = [(2 - 1) / 5] × 100 = 1/5 × 100 = 20% per annum.
Q: How does compound interest behave when compounded half-yearly?
When compounded half-yearly (semi-annually), the annual interest rate is halved (R' = R / 2) and the number of compounding conversion periods is doubled (T' = 2 × T). The amount formula becomes: A = P [1 + (R / 200)]^(2T).
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