PRACTICE QUESTIONS

ZIDD

TIME VALUE OF MONEY

1. If an amount becomes 15000 in 3.5 yrs and 33750 in next 7 years, at CI, then
the amount invested is
(A) Rs.

(B) Rs.
7500
9000 F Ions
533755 1
(C) Rs. 10000
0
(D) None of these 000 11 3375050

1 1 33750 K2
15000 3322
12
3371000
2 25
K
1I
K
K VE 15
2. What is the compound interest on Rs.15,625 for 2.75 years at 16% per annum
compounded quarterly?
(A) Rs. 8429 11.04 1 15625
(B) Rs. 7730
(C) Rs. 8969
(D) Rs. 7995

1
3. Akshay borrows Rs. 65,000 at 10% p.a. simple interest for 3 years and lends it
at 10% p.a. compound interest for 3 years. Find his gain after three years.
(A) 2015

(B) 1330

(C) 1300

(D) 2100

4. If SI on principle X is calculated @ 15% for 3 yrs & CI on principal Y is

calculated @ 10% for 2 years then what is relation between X & Y, if the 0
amount of interest in both the cases is same.
10
(A) 𝑋 = 𝑌
13
7
(B) 𝑋 = 𝑌
15
7
(C) 𝑋 = 𝑌
12
(D) None of these

0
69

2
5. Bank A gives 9.36%, annual interest while gives Bank B gives 9%, monthly
interest. Which bank is better?
(A) A is better
(B) B is better
(C) Both are equally good
(D) Indeterminate

6. The SI on Rs. A at 8% p.a. for 3 years is same as SI on Rs. 7500 at 1.5 times
interest rate as earlier for 2.5 years, then A is
(A) Rs. 9375
(B) Rs. 10500
(C) Rs. 9500
(D) Rs. 8650

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7. A sum of 65,000 is divided into 3 parts such that the corresponding interest
earned after 2 years, 3 years and 5 years may be equal at the rate of simple
interest rate 5% p.a., 10% p.a., & 5% p.a. respectively, then the smallest part
of the sum will be.
(A) 12000

(B) 15000

(C) 12500

(D) None of these

8. Suppose your dad decides to gift you Rs. 8000 every year starting from today
for the next 10 years. You deposit this amount in a bank as and when you
receive and get 8.5% per annum interest rate compound annually. What is
the present value of this money?
(A) 56953

(B) 60430

(C) 70774

(D) None of these

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9. Steve borrows Rs. 50,000 on condition to repay it with compound interest at
5% p.a. in annual instalment of Rs. 4,000 each. Find the number of years in
which the debt would be paid off.
(A) 18 years
(B) 21 years
(C) 23 years
(D) 16 years

10. If the annual rate of simple interest increases from 8.5% to 9.75%, a man's
yearly income increases by Rs. 375. Number of years taken to earn the total
simple interest of Rs. 11700 under new rate will be
(A) 2 years
(B) 2.5 years
(C) 3 years
(D) 4 years

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11. A person wants to lease out a machine costing Rs. 5,00,000 for a 10 year
period. It has fixed a rental of Rs. 51,272 per annum payable annually starting
from the end of first year. Suppose rate of interest is 10% per annum
compounded annually on which money can be invested. To whom this
agreement is favourable?
(A) Favour of Lessee
(B) Favour of Lessor
(C) Not for both
(D) Can’t be determined

12. A man invested one-third of his capital at 4% p.a., one-fifth at 10% and the
remainder at 5% p.a. If the annual income is Rs. 493. The capital is-
(A) Rs. 6670
(B) Rs. 5500
(C) Rs. 8700
(D) Rs. 9800

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13. If the nominal rate of growth is 14% and inflation is 7.5% for the five years.
Let P be the Gross Domestic Product (GDP) amount at the present year then
the projected real GDP after 5 years is:
(A) 1.37P

(B) 1.459P

(C) 1.286P

(D) None of these

14. A loan of Rs. 95000 is to be paid back in four equal half yearly instalments. If
the rate of interest is 8% p.a., then the total interest charged (in Rs.) under
this installment plan is
(A) 10387

(B) 9686

(C) 7980

(D) 9239

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15. Let the operating profit of a manufacturer for five years is given as:
Years 1 2 3 4 5
Operating profit (in 80 98 106.4 110.9 122.24
lakh Rs.)

Then the operating profit of Compound Annual Growth Rate (CAGR) for year
5 with respect to year 1 is given that:
(A) 9.09%

(B) 10.55%

(C) 11.18%

(D) 12.43%

16. An amount is lent at k% simple interest for (k+1) years and the simple
interest amount was one-fifth of the principal amount. Then no. of years is
_______
(A) 4

(B) 5

(C) 5.5

(D) 6.5

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17. A stock pays annually an amount of Rs. 25 from 4th year onwards. What is the
present value of the perpetuity, if the rate of return is 10%?
(A) 160.6

(B) 170.7

(C) 187.8

(D) 133.3

18. A certain sum of money becomes 30000 in 10 years and 75000 in 20 years at
a certain rate of CI, the amount invested is
(A) 10000

(B) 15000

(C) 12000

(D) 18000

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19. A sum of Rs. 10000 is lent partly at 12% p.a. and remaining at 14% p.a. SI for
a year. If the total interest accrued at the end of the year was. Rs. 1275, then
the money lent at 14% is
(A) Rs. 6250
(B) Rs. 3750
(C) Rs. 5000
(D) Rs. 4000

20. A company uses a machine worth Rs. 60000 with effective life of 6 years. If
after 6 years scrap value is 15% of original cost and new machine is available
at 25% higher than cost today, then the provision for sinking fund that the
company should kept aside if the rate of bank interest is 3.5% p.a. is
(A) 10125

(B) 10030

(C) 10076

(D) 10003

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21. If the difference between the simple and the compound interests on same
principal amount at 20% for 3 years is Rs.48, then the principal amount must
be
(A) 650

(B) 600

(C) 400

(D) 375

22. Find the present worth of Rs. 20872.5 due 2 years hence at 10% rate of
interest.
(A) 17500

(B) 17550

(C) 17750

(D) 17250

23. A sum of Rs. 1000 is to be divided among two brothers such that if the
interest being compounded annually is 5% per annum, then the money with
the first brother after 4 years is equal to the money with the second brother
after 6 years.
(A) 300 and 700
(B) 325 and 675
(C) 525 and 475
(D) 750 and 250

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24. If an amount triples in 5 years, at Simple Interest, then in how many years it
will become 6.6 times?
(A) 12 years
(B) 14 years
(C) 15 years
(D) None of the above

25. If the SI is 56% less than the principle at the interest rate of 5.5% p.a interest
rate then the number of years i
(A) 6 years
(B) 7 years
(C) 8 years
(D) None of the above

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 ANSWER KEY

1 C 2 A 3 A 4 B 5 B

6 A 7 C 8 A 9 B 10 D

11 B 12 C 13 A 14 B 15 C

16 B 17 B 18 C 19 B 20 C

21 D 22 D 23 C 24 B 25 C

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 Speed Test
1. If ₹ 64 Amount to ₹ 83.20 in 2 years, what will ₹ 86 amount to in 4 years at the same
rate percent per annum?
(A) ₹ 127.60 (B) ₹ 147.60 (C) ₹ 145.34 (D) ₹ 117.60

2. How much amount is required to be invested every year so as to accumulate

₹5,00,000 at the end of 12 years, if interest is compounded annually at 10%?
(A) ₹ 23381.65 (B) ₹ 24355.85 (C) ₹ 26381.65 (D) ₹ 28362.75

3. 10 years ago the earning per share (EPS) of ABC Ltd. was ₹ 5 share. Its EPS for this
year is ₹ 22. Compute at what rate, EPS of the company grow annually?
(A) 15.97% (B) 16.77% (C) 18.64% (D) 14.79%

4. Raju invests ₹ 20,000 every year in a deposit scheme starting from today for next 12
years. Assuming that interest rate on this deposit is 7% per annum compounded
annually. What will be the future value of this annuity?
(A) ₹ 540,526 (B) ₹ 382,813 (C) ₹ 643,483 (D) ₹ 357,769

5. Mr. Prakash invested money in two schemes 'A' and 'B' offering compound interest at
the rate of 8% and 9% per annum respectively. If the total amount of interest accrued
through these two schemes together in two years was ₹ 4818.30 and total amount
invested was ₹ 27,000, What was the amount invested in scheme 'A'?
(A) ₹ 13,000 (B) ₹ 12,500 (C) ₹ 12,000 (D) ₹ 13,500

6. The difference between compound interest and simple interest on an amount of ₹

15,000 for 2 years is ₹ 96. What is the rate of interest per annum?
(A) 9% (B) 8% (C) 11% (D) 10%

7. Suppose Mr. X invested ₹ 5,000 every year starting from today in mutual fúnd for next
10 years. Assuming that average return compounded annually is at 18% per annum.
What is future value?
(A) ₹ 1,83,677.68 (B) ₹ 1,38,678.85
(C) ₹ 1,83,776.53 (D) ₹ 1,38,774.55

8. A person wants to open a shop have two options to acquire a commercial space either
by leasing for 10 years at annual rent of ₹ 2,00,000 or by purchasing the space for ₹
12,00,000. If person can borrow money at 14% compounded per annum. Which
alternate is most suitable?
(A) Leasing (B) Purchase (C) Can't say (D) Data insufficient

9. Manoj invests ₹ 12,000 at 6% per annum simple interest to obtain a total amount of ₹
14,880. What is the time for which the amount was invested?
(A) 3 years (B) 4 years (C) 2 years (D) 5 years

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 1
10. Mr. X makes a deposit of ₹ 50,000 in the bank for a period of 2 years. If the rate of
2
interest is 12% per annum compounded half yearly, then the maturity value money
deposited by Mr. X is:
(A) ₹ 66,910 (B) ₹ 66,123 (C) ₹ 67,925 (D) ₹ 65,550

11. Mrs. X invests in an annuity immediately that promises annual payments of ₹ 50,000
for the next 16 years. If the interest rate is 6% compounded the approximate present
value of this annuity is ___________.
(A) ₹ 5,51,217.75 (B) ₹ 5,75,900.00
(C) ₹ 5,05,288.08 (D)₹ 5,35,612.45

12. A machine costing ₹ 1,00,000 has useful life of 10 years. If the rate of depreciation is
12%, what is scrap value of the machine at the end of life?
(A) ₹ 25,850 (B) ₹ 26,850 (C) ₹ 27,850 (D)₹ 28,850
1
13. Compute the compound interest on ₹ 6,000 for 1 years at 8% per annum if interest
4
will be compounded quarterly.
(A) 642 (B) 630.78 (C) 634.68 (D) 624.48

14. Mr. XYZ invested ₹ 60,000 in a nationalized bank in the form of fixed deposit at the
rate of 7.5% per annum simple interest rate. He received ₹ 73,500 after the end of the
term of fixed deposit. Calculate the period for which ₹ 60,000 was invested in fixed
deposit.
(A) 3 Years (B) 3.5 Years (C) 4 Years (D) 4.5 Years

15. Calculate the present value ₹ 2,000 to be required after 10 years compounded
annually at 5% per annum.
(A) 1,227.82 (B) 1,282.48 (C) 1,328.35 (D) 1,822.65

16. Mr. Ram invested a total of Rs. 1,00,000 in two different banks for a fixed period. The
first bank yields an interest of 9% per annum and second, 11% per annum. If the total
interest at the end of one year is 9.75% per annum, then the amount invested in these
banks are respectively:
(A) Rs. 52,500, Rs. 47,500 (B) Rs. 62,500, Rs. 37,500
(C) Rs. 57,500, Rs. 42,500 (D) Rs. 67,500, Rs. 32,500

17. A company want to replace its existing tool room machine at the end of 10 years, the
expected cost of machine would be Rs. 10,00,000. If management of the company
creates a sinking fund, how much provision needs to be made out of revenue each year
which can earn at the rate of 10% compounded annually?
(A) Rs. 74,625 (B) Rs. 72,514 (C) Rs. 62,745 (D) Rs. 67,245

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18. A car is available for Rs. 4,98,200 cash payment or Rs. 60,000 cash down payment
followed by three equal annual instalments. If the rate of interest charged is 14% per
annum compounded yearly, then total interest charged in the instalment plan is
(A) Rs. 1,46,314 (B) Rs. 1,46,137 (C) Rs. 1,28,040 (D) Rs. 1,58,040

19. The difference between compound interest and simple interest on a certain sum of
money invested for 3 years at 6% per annum is Rs. 110.16. The principle is
(A) Rs. 3,000 (B) Rs. 3,700 (C) Rs. 12,000 (D) Rs. 10,000

20. A machine depreciates at 10% of its value at the beginning of a year. The cost and
scrap value realized at the time of sale being Rs. 23,240 and Rs. 9,000 respectively.
Approximately, for how many years the machine is put to use?
(A) 7 (B) 8 (C) 9 (D) 10

21. The compound interest on Rs. 15,625 for 9 months at 16% per annum compounded
quarterly is:
(A) Rs. 1,851 (B) Rs. 1,941 (C) Rs. 1,951 (D) Rs. 1,961

22. Mr. Sharad got his retirement benefits amounting to Rs. 50,00,000. He want to
receive a fixed monthly sum of amount for his rest of life, starting after one month and
thereafter he want to pass on the same to future generation. He expects to earn an
interest of 9% compounded annually. Determine how much perpetuity amount he will
receive every month?
(A) Rs. 39,500 (B) Rs. 38,500 (C) Rs. 37,500 (D) Rs. 36,600

23. Jonny wants to have Rs. 2,00,000 in his saving account after three year. The rate of
interest offered by bank is 8% per annum compounded annually. How much should he
invest today to achieve his target amount?
(A) Rs.1,47,489.10 (B) Rs.1,58,766.44
(C) Rs.1,71,035.59 (D) Rs.1,84,417.96

24. If a loan of Rs. 30,000 is to be paid in 5 annual instalments with interest rate of 14%
per annum, then the equal annual instalment will be _______
(A) Rs. 7,400 (B) Rs. 8,100 (C) Rs. 8,738 (D) Rs. 8,322

25. Assuming that the discount rate is 12% per annum, how much would you pay to get
Rs. 100 per year, growing at 4% annually forever?
(A) Rs. 1,425 (B) Rs. 1,300 (C) Rs. 1,250 (D) Rs. 1,150

26. A person invests in a fund that pays 4% per annum for four years. The future value of
1
current Rs. 4,000 would be Rs. ___________. (Use, if needed, (1.04) 4 = 1.1698 , =
(1.04)4
1
0.8548, (1.04)2 = 1.2160 and = 0.8219)
(1.04)4
(A) Rs. 3,419 (B) Rs. 4,679 (C) Rs. 4,866 (D) Rs. 3,287

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27. The difference between the compound interest amount and the simple interest
amount for a period of two years, at same interest rate r, is _________.
(A) P  r2 (B) P  r/2 (C) P  2  r (D) P2  r

28. You bought a painting 10 years ago as an investment. You originally paid Rs. 85,000
for it. If you sold it for Rs. 4,84,050, what was your annual return on investment?
(A) 47% (B) 4.7% (C) 19% (D) 12.8%

29. What is the present value of an investment that pays Rs. 400 at the end of three years
and Rs. 500 at the end of 6 years?
(A) Rs. 320 (B) Rs. 335 (C) Rs. 340 (D) Rs. 280

30. At 8% compounded annually, how long will it take Rs. 750 to double?
(A) 6.5 years (B) 48 months (C) 9 years (D) 12 years

31. At a certain rate of interest per annum, the difference between the compound
interest and simple interest on ₹3,00,000 for two years is ₹ 480, then the rate of
interest per annum is:
(A) 2% (B) 4% (C) 6% (D) 8%

32. The value of a machine depreciates every year at the rate of 10% per annum, on its
value at the beginning of that year. If the present value of the machine is 72,900, then
machine's worth 3 years ago was:
(A) ₹ 94,710 (B) ₹80,000 (C) ₹ 1,00,000 (D) ₹ 75,087

33. What is the effective rate of interest when principal amount of ₹ 50,000 deposited in
a nationalized bank for one year, corresponding to a nominal rate of interest 6% per
annum payable half yearly?
(A) 6.06% (B) 6.07% (C) 6.08% (D) 6.09%

34. Kanta wants to accumulate ₹ 4,91,300 in her savings account after three years. The
rate of interest offered by bank is 6.25% per annum compounded annually. How
much amount should she invest today to achieve her target amount?
(A) ₹4,09,600 (B) ₹ 4,37,500 (C) ₹46,900 (D) ₹ 49,600

35. The sum required to earn a monthly interest of ₹ 1,200 at 18% per annum simple
interest is:
(A) ₹ 50,000 (B) ₹ 60,000 (C) ₹ 80,000 (D) ₹ 66,000

36. The compound interest on ₹ 40,000 at 12% per annum compounded quarterly for 6
months is:
(A) ₹ 2,643 (B) ₹ 2,463 (C) ₹ 2,364 (D) ₹ 2,436

17
37. In an account paying interest @ 9% per year compounded monthly, ₹ 200 is
invested at the end of each month. What is the future value of this annuity after 10th
payment?
(A) ₹ 1,022 (B) ₹ 2,066 (C) ₹ 2,044 (D) ₹ 2,155

38. What is the present value of 1,000 to be received after two years compounded
annually at 10% interest rate ?
(A) ₹ 800 (B) ₹ 826 (C) ₹ 836 (D) ₹ 835

39. Mr. X makes a deposit of ₹ 12,000 in a bank where the amount doubles at compound
interest in 5 years, then what will be the total amount he will have after twenty years?
(A) ₹ 96,000 (B) ₹1,20,000 (C) ₹ 1,24,000 (D) ₹ 1,92,000

40. The Earning Per Share (EPS) of a company for five years is given below:
Year 2019 2020 2021 2022 2023
EPS 40 25 40 60 90
Calculate the Compounded Annual Growth Rate (CAGR) of EPS.
(A) 24.47% (B) 23.47% (C) 22.47% (D) 21.47%

41. A loan of 16,550 is to be paid in three equal annual instalments at compound interest.
The value of annual instalment, if the rate of interest is 10% per annum is:
(A) 6,655 (B) ₹ 1,243 (C) ₹ 6,565 (D) ₹1,343

42. A Perpetuity has a cash flow of ₹ 625 and a required rate of return of 8%. If the cash
flow is expected to grow at a constant rate of 4% per year, then the intrinsic value of
this perpetuity (present value of growing perpetuity) is:
(A) ₹15,625 (B) ₹13,000 (C) ₹ 14,250 (D) ₹ 16,667

43. What is the annual contribution required by an organization to accumulate ₹

20,00,000 in ten years for the construction of a new manufacturing plant, utilizing a
sinking fund with an annual interest rate of 6% compounded annually?
(A) ₹ 1,51,736.03 (B) ₹ 1,67,440.90
(C) ₹ 1,75,433.60 (D) ₹ 1,83,714.28

44. At what rate of SI, the principle amount gets quadraple in 18 years?
(A) 22.2% (B) 16.6% (C) 12.5% (D) 20%

45. The difference between CI and SI at the end of 2 years on the principle of Rs. 30000
will be (assume the rate of interest is 7.5% in both the cases)
(A) ₹ 168.75 (B) ₹ 150.25 (C) ₹ 179.5 (D) None of these

18
 Answer Key – Speed Test

1 C 2 A 3 A 4 B 5 C

6 B 7 D 8 A 9 B 10 A

11 D 12 C 13 D 14 A 15 A

16 B 17 C 18 C 19 D 20 C

21 C 22 C 23 B 24 C 25 C

26 B 27 A 28 C 29 A 30 C

31 B 32 C 33 D 34 A 35 C

36 D 37 B 38 B 39 D 40 A

41 A 42 A 43 A 44 B 45 A

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