Level 1
Simple & Compound Interest MCQs set 3 for NBP Officer Grade (IBA / NTS) Mathematics — 20 solved questions.
Q1. The effective annual rate of interest corresponding to a nominal rate of 6% per annum payable half yearly is: _______?
Answer: 6.09%
Explanation: Compounding half-yearly at 3% per period: (1.03)² − 1 = 0.0609 = 6.09% effective annual rate.
Q2. At what rate of interest will Rs. 20000 becomes Rs. 24200 after 2 years when interest is compounded annually?
Answer: 10%
Explanation: (1+r)² = 24200/20000 = 1.21, so 1+r = 1.1 and r = 10% per annum.
Q3. A man purchased a cow for Rs. 3000 and sold it the same day for Rs. 3600, allowing the buyer a credit of 2 years. If the rate of interest be 10% per annum, then the man has a gain of:
Answer: 0%
Explanation: The present value of Rs. 3600 payable after 2 years at 10% simple interest = 3600/1.20 = Rs. 3000, exactly the purchase price, so there is 0% gain.
Q4. What will be the difference between simple and compound interest at 10% per annum on a sum of Rs. 1000 after 4 years?
Answer: Rs. 64.10
Explanation: SI over 4 years = Rs. 400; CI = 1000 × (1.1⁴ − 1) = Rs. 464.10; difference = Rs. 64.10.
Q5. Nabeela 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?
Answer: 6%
Explanation: SI = P×r×r/100 (since years = rate); so 1200×r²/100 = 432 gives r² = 36, meaning r = 6%.
Q6. The simple interest on Rs.500 at 6% per annum from May 3rd to July 15th in the same year is_________?
Answer: Rs0.60
Explanation: May 3 to July 15 spans 73 days; SI = 500 × 6/100 × 73/365 = Rs. 6.
Q7. The difference between simple and compound interests compounded annually on a certain sum of money for 2 years at 4% per annum is Re. 1. The sum (in Rs. ) is_________?
Answer: 625
Explanation: The difference between CI and SI for 2 years = P × (r/100)² = P × (0.04)² = 1. Solving gives P = Rs. 625.
Q8. A sum of money amounts to Rs. 9800 after 5 years and Rs. 12005 after 8 years at the same rate of simple interest. The rate of interest per annum is:
Answer: 12%
Explanation: Interest over 3 years = 12005 − 9800 = Rs. 2205; principal = 9800 − 5×(2205/3) = 6125; rate = 2205×100/(6125×3) = 12%.
Q9. Find the Compound Interest on Rs. 15,625 for 9 months at 16% per annum compounded quarterly?
Answer: Rs. 1951
Explanation: Quarterly rate = 4%, compounded over 3 quarters; CI = 15625 × [(1.04)³ − 1] = 15625 × 0.124864 = Rs. 1951.
Q10. A sum was put a simple interest at a certain rate for 2 years. Had it been put at 4% higher rate, it would have fetched Rs. 60 more. The sum is:
Answer: Rs0.75
Explanation: Extra interest over 2 years = P × 4% × 2 = 0.08P = 60, so P = Rs. 750.
Q11. Mr. Tassawar Javed invested an amount of Rs. 13,900 divided in two different schemes A and B at the simple interest rate of 14% p.a. and 11% p.a. respectively. If the total amount of simple interest earned in 2 years be Rs. 3508, what was the amount invested in
Answer: Rs. 6400
Explanation: Let x be invested in scheme A; 0.28x + 0.22(13900−x) = 3508 gives x = Rs. 7500 in scheme A, meaning Rs. 6400 was invested in scheme B.
Q12. Afnan wants to borrow Rs.6000 at rate of interest 6% p.a. at S.I and lend the same amount at C.I at same rate of interest for two years. What would be his income in the above transaction?
Answer: Rs.21.60
Explanation: SI = 6000×6×2/100 = Rs. 720. CI = 6000×(1.06²−1) = Rs. 741.60. Income = 741.60 − 720 = Rs. 21.60.
Q13. A sum of money becomes 7⁄5 of itself in 4 years at a certain rate of simple interest. The rate per annum is:
Answer: 10%
Explanation: Simple interest = 7P/5 − P = 2P/5 earned over 4 years; rate = (2P/5)/(P×4) × 100 = 10% p.a.
Q14. A person got Rs.48 more when he invested a certain sum at compound interest instead of simple interest for two years at 8% p.a. Find the sum?
Answer: Rs0.75
Explanation: The extra earning from compound over simple interest for two years = P(r/100)² = 48; with r=8, P×0.0064=48, so P = Rs. 7500.
Q15. If the interest is payable annually then the principal on which the compound interest for 3 years at 10% P.a is Rs. 331 is given by:__________?
Answer: Rs. 1000
Explanation: Using P×(1.10³−1) = 331: P×0.331 = 331, so P = Rs. 1000.
Q16. A sum of money at simple interest amounts to Rs. 2800 in 2 years and Rs. 3250 in 5 years. Find the sum and the rate of interest. Interest
Answer: Rs.2500 and 6%
Explanation: Interest for years 3-5 (3 years) = 3250−2800 = Rs. 450, so annual SI = Rs. 150. Principal = 2800 − 2×150 = Rs. 2500; rate = 150×100/2500 = 6%.
Q17. The difference between the compound interest compounded annually and simple interest for 2 years at 20% per annum is Rs.144. Find the principal?
Answer: Rs0.36
Explanation: The difference between compound and simple interest for 2 years = P(r/100)²; with r=20%: P×0.04 = 144, so P = Rs. 3600.
Q18. If the principal is Rs. 100,000 and the rate of interest is 10% compounded half-yearly, what is the amount after one year?
Answer: Rs. 1,10,250
Explanation: 10% p.a. compounded half-yearly = 5% per half year. Amount = 100000 × (1.05)² = 100000 × 1.1025 = Rs. 1,10,250.
Q19. The difference between compound interest and simple interest at the same rate on Rs 5000 for 2 years is Rs 72. The rate of interest per annum is:___________?
Answer: 12%
Explanation: The difference between CI and SI for 2 years = P×r²/100² = 5000r²/10000 = r²/2 = 72, so r² = 144 and r = 12%.
Q20. At the end of three years what will be the compound interest at the rate of 10% p.a. on an amount of Rs.20000?
Answer: Rs0.66
Explanation: CI = P[(1 + r)ⁿ − 1] = 20000[(1.10)³ − 1] = 20000 × 0.331 = Rs. 6,620.