Relation between SI & CI

Relation Between SI & CI

There are two ways to calculate interest on a loan. Simple interest is easier to calculate than
compound interest due to some fundamental relation between the two. The following example will
tell us the relation between simple and compound interest.
 Question: Q01

Let us say Rimi has borrowed (principal) ₹100 at 5% per annum for 33 years at simple interest.
How much will she pay if she pays the final amount of 1st year/ 2nd year /3rd year?

Answer : A
 Question: Q02

If the simple interest on a sum of money for 2 years at 5% per annum is Rs. 50, what is the
compound interest on the same at the same rate and for the same time?

A. Rs. 51.25
B. Rs. 52
C. Rs. 54.25
D. Rs. 60

Answer : A
 Question: Q03

Calculate the compound interest at the rate of 6% per annum for 2 years on the
principle which in 2 years at the rate of 2% per annum gives Rs. 8000 as simple interest.
a) 50000
b) 49440
c) 59440
d) 49000

Answer : B
 Question: Q04

Compute the compound interest on Rs. 16000 for 2 years 10% per annum when
compounded half yearly.
a) 18600
b) 17640
c) 18640
d) 17600

Answer : B
 Question: Q05

Ravi took a loan of Rs. 1200 with simple interest for as many years as the rate of interest. If
she paid Rs. 432 as interest at the end of the loan period, what was the rate of interest ?

(A) 3.6
(B) 6
(C) 18
(D) None of these

Answer : B
 Question: Q06

A sum of Rs. 725 is lent in the beginning of a year at a certain rate of interest. After 8
months, a sum of Rs. 362.50 more is lent but at the rate twice the former. At the end of
the year, Rs. 33.50 is earned as interest from both the loans. What was the original rate
of interest?
(A) 3.6%
(B) 4.5%
(C) 5%
(D) None of these

Answer : D
 Question: Q07

Simple interest on a certain sum of money for 3 years at 8% per annum is half the
compound interest on Rs. 4000 for 2 years at 10% per annum. The sum placed on simple
interest is:

A. Rs. 1550
B. Rs. 1650
C. Rs. 1750
D. Rs. 2000

Answer : C
 Question: Q08

The difference between simple interest and compound on Rs. 1200 for one year at 10% per
annum reckoned half-yearly is:

A. Rs. 2.50
B. Rs. 3
C. Rs. 3.75
D. Rs. 4

Answer : B
 Question: Q09

The difference between compound interest and simple interest on an amount of Rs.
15,000 for 2 years is Rs. 96. What is the rate of interest per annum?
A. 8
B. 10
C. 12
D. Cannot be determined

Answer : A
 Question: Q10

The compound interest on a certain sum for 2 years at 10% per annum is Rs. 525. The
simple interest on the same sum for double the time at half the rate percent per annum is:

A. Rs. 400
B. Rs. 500
C. Rs. 600
D. Rs. 800

Answer : B
 Question: Q11

The effective annual rate of interest corresponding to a nominal rate of 6% per annum
payable half-yearly is:

A. 6.06%
B. 6.07%
C. 6.08%
D. 6.09%

Answer : D
 Question: Q12

Albert invested an amount of Rs. 8000 in a fixed deposit scheme for 2 years at compound interest rate 5
p.c. How much amount will Albert get on maturity of the fixed deposit?

A. Rs. 8600
B. Rs. 8620
C. Rs. 8820
D. None of these

Answer : C
 Question: Q13

The least number of complete years in which a sum of money put out at 20% compound interest will
be more than doubled is:

A. 3
B. 4
C. 5
D. 6

Answer : C
 Question: Q14

Calculate the compound interest on Rs. 4000 for 2 years at 20% per annum when
compounded annually.
a) 1856.4
b) 1756.4
c) 1846.4
d) 1746.4

Answer : A
 Question: Q15

Find the amount on Rs. 5000 at the rate of 20% per annum for 18 months when interest is
compounded half yearly.

a) 6644
b) 6666
c) 6000
d) 6655

Answer : D
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