Compound Interest

What you'll learn

Learn Compound Interest through a simple snowball analogy, master the amount formula for annual, half-yearly and quarterly compounding, see a worked example, use the CI-minus-SI shortcuts, and test yourself with a quiz for SSC-CGL.

This chapter has

Compound Interest — solved practice questions

8 SSC / Banking Quantitative Aptitude questions with step-by-step solutions. Attempt each, then reveal the answer.

1. Q1easy

   The formula for Compound Interest Amount is:

   • AP(1+R/100)ⁿ
   • BP×R×T/100
   • CP+PRT/100
   • DP(1−R/100)ⁿ
   Show answer & solution

   Correct answer: (A) P(1+R/100)ⁿ

   A = P(1 + R/100)ⁿ, where P=principal, R=rate%, n=years.

2. Q2easy

   Compound interest on ₹1000 at 10% p.a. for 2 years is:

   • A₹200
   • B₹205
   • C₹210
   • D₹220
   Show answer & solution

   Correct answer: (C) ₹210

   A = 1000×(1.1)² = 1210. CI = 1210−1000 = ₹210.

3. Q3easy

   Simple interest on ₹1000 at 10% for 2 years is ₹200. CI for the same is ₹210. The difference is:

   • A₹5
   • B₹10
   • C₹15
   • D₹20
   Show answer & solution

   Correct answer: (B) ₹10

   CI − SI = ₹10. The extra ₹10 is interest on the first year's interest.

4. Q4medium

   ₹2000 is invested at 5% p.a. CI for 3 years. Amount after 3 years:

   • A₹2300
   • B₹2310
   • C₹2315.25
   • D₹2320
   Show answer & solution

   Correct answer: (C) ₹2315.25

   A = 2000×(1.05)³ = 2000×1.157625 = ₹2315.25.

5. Q5medium

   At what rate % p.a. does ₹1000 become ₹1210 in 2 years (CI)?

   • A5%
   • B10%
   • C15%
   • D20%
   Show answer & solution

   Correct answer: (B) 10%

   1210 = 1000(1+R/100)² → (1+R/100)² = 1.21 → 1+R/100 = 1.1 → R = 10%.

6. Q6hard

   The difference between CI and SI on ₹P at R% for 2 years is:

   • AP(R/100)
   • BP(R/100)²
   • CPR²/100
   • DPR/10000
   Show answer & solution

   Correct answer: (B) P(R/100)²

   CI − SI = P(R/100)². Derived from: CI = P[(1+R/100)²−1], SI = 2PR/100.

7. Q7hard

   A sum doubles at 8% CI in approximately how many years?

   • A7 years
   • B8 years
   • C9 years
   • D10 years
   Show answer & solution

   Correct answer: (C) 9 years

   Rule of 72: years ≈ 72/8 = 9 years.

8. Q8hard

   ₹5000 at 4% p.a. CI, compounded half-yearly for 1 year. Amount:

   • A₹5200
   • B₹5202
   • C₹5204
   • D₹5210
   Show answer & solution

   Correct answer: (B) ₹5202

   Half-yearly rate = 2%, periods = 2. A = 5000×(1.02)² = 5000×1.0404 = ₹5202.

Want the full set? Practise all 15 Compound Interest questions →