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Arithmetic: Compound Interest Test -2

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Question 1
Find the total amount due when Rs. 2000 is compounded annually at the rate of 5% three years.
A
2305
B
2315
C
2405
D
2505
Question 1 Explanation: 
Given values
Principal=2000
Rate = 5%
Time =3 years
So the amount can be calculated using the formula:
A = P (1+R/100)t
A = 2000(1+5/100)3
A = 2000(1+1/20)3
A = 2000 x 21/20 x 21/20 x 21/20 =Rs. 2315.25
Hence, option b is the right answe
Question 2
Meera got a Rs 4000 loan from Richa for a time period of 2 years 2 months and at a rate of 2% per annum. Find the amount paid by Meera to Richa as compound Interest.
A
4175
B
175
C
156
D
4235
Question 2 Explanation: 
Since we have to find the compound interest
We have the formula for amount when time given is in fractions is
A = P (1+R/100)y{1+ (m/12 X R/100)}  where y is the number of years and m is the months
So the amount is = 4000(1+2/100)2{1+ (2/12 X 2/100)}
= 4000(1+1/50)2{1+ (1/6 X 1/50)}
= 4000 x( 51/50 x 51/50){301/300}
A = Rs 4175.30
Compound Interest= 4175 – 4000 = Rs 175
Question 3
An amount of 7500 is invested in a compound interest scheme for 4 years. The rate of interest is 2% for the first year, 3 % for next 2 years, and for the last year, it is 4%. The final amount is:
A
8356.7
B
8557.45
C
8440
D
none
Question 3 Explanation: 
It is a logical question
Given values are
Principal = 7500
Rate = 2%, 3%, 4%
Time 4 years
Since the rate is varying with respect to time so
Amount for first year
A =P(1+R/100)
A = 7500(1+2/100) =Rs.7650
Therefore, this amount acts as the principal for the next two years and the
rate for the next two years the rate is 3%, the amount will be
A = 7650(1+3/100)2 = 8115.885
For the fourth year, the amount above acts as the principal.
The rate of interest for the last year is 4%, therefore the final amount becomes:
A=8115(1+4/100) = 8440
Question 4
The amount that a person would receive when he invest Rs.5600 at 4% rate for 1 year, compounded half yearly, is:
A
5789
B
5956
C
5826
D
6897
Question 4 Explanation: 
For half yearly compounding, the formula is:
A = P {(1+R/2)/ 100}2T
A = 5600{(1+4/100)2
A = 5600 x 51/50 x 51/50 =5826.24=Rs. 5826
Question 5
Find the compound interest on Rs. 4500 at 16% rate for 6 months compounded quarterly.
A
366.4
B
364.5
C
325.7
D
367.2
Question 5 Explanation: 
For quarterly compound interest, the formula is:
A = P {(1+R/4)/ 100}4T
A = 4500{(1+16/4) /100}4x6/12
A = 4500{(1+4/100}2
A = 4500{(1+1/25)}2
A = 4500 x 26/25 x 26/25=Rs 4867.2
So the compound interest will be 4867.2 – 4000 = Rs 367.2
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Table of Contents: Compound Interest Lesson

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