Example 1: How much interest will be earned on ₹ 2000 at 6% simple interest for 2 years?

Example 2: Sania deposited ₹ 50,000 in a bank for two years with the interest rate of 5.5%
p.a. How much interest would she earn?

Example 3: In example 2 what will be the final value of investment?

Example 4: Sachin deposited ₹ 1,00,000 in his bank for 2 years at simple interest rate of
6%. How much interest would he earn? How much would be the final value of deposit?

Example 5: Find the rate of interest if the amount owed after 6 months is ₹ 1050, borrowed
amount being ₹ 1000.

Example 6: Rahul invested ₹ 70,000 in a bank at the rate of 6.5% p.a. simple interest rate.
He received ₹ 85,925 after the end of term. Find out the period for which sum was invested
by Rahul.

Example 7: Kapil deposited some amount in a bank for 7 ½ years at the rate of 6% p.a.
simple interest. Kapil received ₹ 1,01,500 at the end of the term. Compute initial deposit of
Kapil.

Example 8: A sum of ₹ 46,875 was lent out at simple interest and at the end of 1 year 8
months the total amount was ₹ 50,000. Find the rate of interest percent per annum.

Example 9: What sum of money will produce ₹ 28,600 as an interest in 3 years and 3
months at 2.5% p.a. simple interest?

Example 10: In what time will ₹ 85,000 amount to ₹ 1,57,675 at 4.5 % p.a. ?

Example 11: Saina deposited ₹ 1,00,000 in a nationalized bank for three years. If the rate of
interest is 7% p.a., calculate the interest that bank has to pay to Saina after three years if
interest is compounded annually. Also calculate the amount at the end of third year.

Example 12: ₹ 2,000 is invested at annual rate of interest of 10%. What is the amount after
two years if compounding is done (a) Annually (b) Semi-annually (c) Quarterly (d) monthly.

Example 13: Determine the compound amount and compound interest on ₹ 1000 at 6%
compounded semi-annually for 6 years. Given that (1 + i)n = 1.42576 for i = 3% and n = 12.

Example 14: Compute the compound interest on ₹ 4,000 for 1½ years at 10% per annum
compounded half- yearly.

Example 16: What annual rate of interest compounded annually doubles an investment in 7
years? Given that 217 = 1.104090

Example 17: In what time will ₹ 8,000 amount to ₹ 8,820 at 10% per annum interest
compounded half-yearly?

Example 19: A certain sum invested at 4% per annum compounded semi-annually amounts
to ₹78,030 at the end of one year. Find the sum.
Example 20: ₹ 16,000 invested at 10% p.a. compounded semi-annually amounts to ₹ 18,522.
Find the time period of investment.

Example 21: A person opened an account on April, 2011 with a deposit of ₹ 800. The
account paid 6% interest compounded quarterly. On October 1 2011 he closed the account
and added enough additional money to invest in a 6 month time-deposit for ₹ 1,000,
earning 6% compounded monthly.

Example 22: ₹ 5,000 is invested in a Term Deposit Scheme that fetches interest 6% per
annum compounded quarterly. What will be the interest after one year? What is effective
rate of interest?

Example 23: Find the amount of compound interest and effective rate of interest if an
amount of ₹ 20,000 is deposited in a bank for one year at the rate of 8% per annum
compounded semiannually.

Example 24: Which is a better investment 3% per year compounded monthly or 3.2% per
year simple interest? Given that (1+0.0025)12 =1.0304.

Example 25: You invest ₹ 3000 in a two year investment that pays you 12% per annum.
Calculate the future value of the investment.

Example 26: Find the future value of an annuity of ₹ 500 made annually for 7 years at
interest rate of 14% compounded annually. Given that (1.14)7 = 2.5023.

Example 27: ₹ 200 is invested at the end of each month in an account paying interest 6%
per year compounded monthly. What is the future value of this annuity after 10th payment?
Given that(1.005)10 = 1.0511

Example 28: Z invests ₹ 10,000 every year starting from today for next 10 years. Suppose
interest rate is 8% per annum compounded annually. Calculate future value of the annuity.
Given that (1+ 0.08)10 = 2.15892500.

Example 29: What is the present value of ₹ 1 to be received after two years compounded
annually at 10% interest rate?

Example 30: Find the present value of ₹ 10,000 to be required after 5 years if the interest
rate be 9%. Given that (1.09)5=1.5386.

Example 31: S borrows ₹ 5,00,000 to buy a house. If he pays equal instalments for 20 years
and 10% interest on outstanding balance what will be the equal annual instalment?

Example 32: ₹ 5,000 is paid every year for ten years to pay off a loan. What is the loan
amount if interest rate be 14% per annum compounded annually?

Example 33: Y bought a TV costing ₹ 13,000 by making a down payment of ₹ 3000 and
agreeing to make equal annual payment for four years. How much would be each payment
if the interest on unpaid amount be 14% compounded annually?
Example 34: Suppose your mom decides to gift you ₹ 10,000 every year starting from today
for the next five years. You deposit this amount in a bank as and when you receive and get
10% per annum interest rate compounded annually. What is the present value of this
annuity?

Example 35: How much amount is required to be invested every year so as to accumulate
₹ 300000 at the end of 10 years if interest is compounded annually at 10%?

Example 36: ABC Ltd. wants to lease out an asset costing ₹ 3,60,000 for a five year period.
It has fixed a rental of ₹ 1,05,000 per annum payable annually starting from the end of first
year. Suppose rate of interest is 14% per annum compounded annually on which money can
be invested by the company. Is this agreement favourable to the company?

Example 37: A company is considering proposal of purchasing a machine either by making

Example 38: A machine can be purchased for ₹ 50000. Machine will contribute ₹ 12000
per year for the next five years. Assume borrowing cost is 10% per annum compounded
annually. Determine whether machine should be purchased or not.

Example 39: A machine with useful life of seven years costs ₹ 10,000 while another
machine with useful life of five years costs ₹ 8,000. The first machine saves labour
expenses of ₹ 1,900 annually and the second one saves labour expenses of ₹ 2,200
annually. Determine the preferred course of action. Assume cost of borrowing as 10%
compounded per annum.