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SBI PROBATIONARY OFFICERS
QUANTITATIVE APTITUDE
SIMPLE AND COMPOUND INTEREST
e t
Simple Interest:
. n
h a
If the interest is calculated on original Principal for a certain period is called the Simple Interest (S.I.).
Simple Interest will be the same for all the years. If P is the principal, R is the rate of interest, T is the time
and S.I. is the simple interest, then

( ) i b
Simple Interest =
PTR

100
TR
Amount = P 1 +
100

a t


p
The amount borrowed is called the Principal. r
Interest is the money that paid for the use of a certain amount.

d u
The sum of interest and principal is called the Amount.
Compound Interest:

n a
The compound interest is the interest which is calculated even on the interest. Thus the amount at the

. e
end of period becomes the principal for the next period.

e
If A is the amount, C.I. is the compound interest, P is the principal, R is the rate, and T is the time, then

w
w )
( R
A = P 1 +
T

e t
w 100

( R
) T
. n
C.I = P 1 +
100
P

h a

i b
Note: If the Interest is paid half yearly, time is doubled and the rate is halved.
If the Interest is paid quarterly, time becomes 4 times and the rate becomes one fourth.
Difference between Simple and Compound Interest

a t
formulae.
p r
Difference between Simple Interest and Compound Interest can be calculated by the following

There is no difference for one year.

d u
For 2 years

Difference =
n P R2

a

.e e
For 3 years
1002

ww
(300 + R) P R2
Difference =
100 3

w
R-19-5-15
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EXERCISE
1
1. What principal will amount to Rs.8550 at 4% per annum simple interest in 3 years?
2
1) Rs.6800
4) Rs.7300
2) Rs.7500
5) None of these
3) Rs.8100

e t
2.

. n
What is the compound interest accrued on an amount of Rs.18000, at the rate of 5%, at the end of 3
years?
1) Rs.20837.25 2) Rs.21525 3) Rs.2837.25
h a
4) Rs.19300.50 5) None of these

i b
3.
t
A sum of money invested at compound interest will become Rs.650 at the end of first year and 676 at
the end of second year. What is the sum?
a
1) Rs.600 2) Rs.625

p r 3) Rs.700

4.
4) Rs.675

d u
5) None of these
What will be the amount on Rs.25000 in 2 years at compound interest, if the rates for the successive

1) Rs.26,800 a
years be 4% and 5% per year?

n 2) Rs.26,725 3) Rs.27,300

e e
4) Rs.27,675

.
5) None of these
5.

w w
A sum of Rs.1400 becomes Rs.1652 in three years at certain rate of simple interest. What will be the
amount if the rate of interest is increased by 3%?

e t
w
1) Rs.378
4) Rs.1778
2) Rs.1748
5) None of these
3) Rs.1586

. n
6.

h a
A sum was invested at simple interest at a certain rate for two years. It would have fetched Rs.240 more
had it been invested at 3% higher rate. What was the sum?
1) Rs.8,500 2) Rs.4,500
i b
3) Rs.5,600
4) Rs.9,000 5) None of these

a t
7.
r
Population of a town in 2011 was 85000. What will be the population in 2014, if it increases annually
at 10%?
p
1) 113135
u
2) 11400

d
3) 11500

8.
4) 11600

n a
5) None of these
The rate of simple interest on a certain amount of money is 6% p.a. for the first two years, 9% p.a. for

e e
next five years and 13% p.a. for the period beyond seven years. If the total interest on a sum at the end
of ten years is Rs.9120, what is the sum?

.
ww
1) Rs.9500 2) Rs.10500 3) Rs.12500
4) Rs.11750 5) None of these

9. w 1
What is the compound interest on Rs.25000 for 1 year at 8% per annum, interest being calculated

half yearly?
2

1) Rs.3225 2) Rs.3050.50 3) Rs.3121.60

4) Rs.2995.50 5) None of these

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10. A certain sum of money lent out at a certain rate of simple interest per annum doubles itself in 8 years.
In how many years will it treble itself?
1) 12 2) 18 3) 24
4) 16 5) None

e t
11.

n
A sum of money will become double in 3 years at compound interest. In what time will it become four
times itself?

.
1) 9 yrs
4) Can't be determined
2) 6 yrs
5) None
3) 12 yrs

h a
12.
i b
A certain sum of money becomes Rs.1250 in a span of 5 years and further to Rs.1700 in the span of 8

1) Rs.2325 2) Rs.2500 t
years at the same rate of simple interest. What would be the amount at the end of 12 years?

a3) Rs.2650
4) Rs.2990

p
5) None of these
r
13.
1) Rs.348 2) Rs.122
d u
What is the difference between simple and compound interest for three years on Rs.16000 at 8% p.a?
3) Rs.496
4) Can't be determined
n a5) None
14.

.e e
A sum of money amounts to Rs.1488 in 3 years at a simple interest. If the rate of interest is raised by
25%, the sum amounts to 1560 during the same period. Find the sum.

w w
1) Rs.1350
4) Rs.1250
2) Rs.1500
5) None of these
3) Rs.1200

e t
15. w . n
A sum of Rs.7200 is lent out in two parts in such a way that the interest on one part at 8% p.a for 3

1) Rs.3200 2) Rs.3600 3) Rs.3300 a

years is same as on the other part at 5% p.a. for 6 years. Find the first part.

h
4) Rs.1800 5) None of these

i b
KEY
a t
r
1-2; 2-3; 3-2; 4-3; 5-4; 6-5; 7-1; 8-1; 9-3; 10-4; 11-2; 12-5; 13-5; 14-3; 15-5.

p
d u EXPLANATIONS

1. Amount = P 1 +
() n TR

a
e
( .e ) 7 4
P 1 + = 8550
100

w w 2 100
8550 2 100

w
Shortcut:
P = = Rs.7500
228

1 1
For one year, rate of interest is 4% and for 3 years it is 4 3 = 14%
2 2

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The amount will become 114%.
If 114% money = 8550, then 100% money
100
= 8550 = Rs.7500
114

e t
2.
( R T
C.I = P 1 + - P
100 )
. n
5 3
(
C.I = 18000 1 + 18000
) h a
[ 105
100
105 105
18000 18000
] i b
= 2837.25
100 100 100

a t
Shortcut:
p r
Amount = 105% of 105% of 105% of 18000

d u
= 20837.25

n a
C.I = 20837.25 18000 = Rs.2837.25
3.

.e e
Interest on Rs.650 is 676 650 = Rs.26
26

w
Rate of interest = 100 = 4%

w ( )
650

e t
w
Amount = P 1 +
R T
100
. n
( 4 1
)
650 100
650 = P 1 + P =
100 104
h a
= Rs.625
i b
4. Amount is 25000 1 +
4
(
100 )(1+
5
100 ) a t
25000 104 105
A = = Rs.27300
100 100
p r
5.
100 SI 100 252
R = R = = 6%
d u
P T

n
1400 3
a
Now the rate of interest is 6 + 3 = 9%

.e e
( ) TR
New amount is P 1 +
100

w
w( ) 3 9
= 1400 1 + = Rs.1778

w
Shortcut:
100

If the rate of interest is increase by 3% then the amount will also increase by that much
1400 3 3
New interest is = Rs.126
100

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New amount is 1652 + 126 = Rs.1778
6. It fetches Rs. 240 more in 2 years.
It fetches Rs.120 more in one year.
that means 3% = Rs.120

e t
100
100% (sum) is 120 = Rs.4000
3
. n
7. Population after 3 years (2014 - 2011) is

h a
8.
110% of 110% of 110% of 85000 = 113135
Let the principal be Rs.x
i b
x 2 6 x 5 9 x 3 13
+ + = 9120
100 100 100
a t
x
(12 + 45 + 39) = 9120
p r
100
x = Rs.9500
d u
9.

n a 1
As interest is calculated half yearly, 1 will be 3 half years and the rate percent will be 4% per half
2
year.

e e
now, R = 4% and T = 3

.
w w ( ) 4 3
C.I. = 25000 1 + 25000
100
e t
w = Rs. 3121.60

. n
10. Let the principal be Rs.P and the amount will be Rs.2 P
100 (2P P)
h a
Rate of interest per annum is = 12.5%
P 8
i b
100 (3P P)
Required time is = 16 years
P 12.5
a t
Shortcut:
p r
d u
Amount doubles in 8 years means to get 100% interest it takes 8 years
To become treble means to get 200% interest it takes 8 + 8 = 16 years
11.
n
Let the money be Rs.100 a
.e e
It becomes Rs.200 in 3 years
Again Rs.200 will become Rs.400 in another 3 years (... Compound interest)

12. ww
amount will become four times in 3 + 3 = 6 years

w
Interest for 3 years (8 5 years) = 1700 1250 = Rs.450
5
Interest for 5 years = 450 = Rs.750
3
Principal = 1250 750 = Rs.500

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12
Interest for 12 years = 450 = Rs.1800
3
Amount after 12 years = 500 + 1800
= Rs.2300
(300 + R)P R2
e t
13. Difference for 3 years is
1003
. n
308 16000 100
= Rs.492.80
1000000
h a
14. Rs.1560 Rs.1488 = 72.

i b
25% of interest = Rs.72
100
a t
100% interest = 72 = Rs.288
25

p r
Therefore Principal = 1488 288
d u
The interest for three years = Rs.288.

n a
= Rs.1200
15.

e
x 3 8

. e
Let the first part be Rs.x, then the second part will be (7200 x)
(7200 x) 5 6
=

w w
100
x = Rs.4000
100

e t
w . n
Writer: Dr. G.S. Giridhar

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