Compound Interest is the Interest calculated on the principal and accumulated interest on the previous period’s loan. Get to know the formula and steps to calculate Compound Interest from here. Check out the Solved Problems on finding the Compound Interest. Try Practicing the Examples over here and refer to them as a quick guide to solve problems on Compound Interest.
Compound Interest Questions and Answers
1. Find the amount if Rs. 10,000 is invested at 10% p.a. for 2 years when compounded annually?
Solution:
We know A = P(1+R/100)n
From given data P = 10,000
R = 10%
n = 2 years
Substituting the input values we have the equation as under
A = 10,000(1+10/100)2
= 10,000(1+0.1)2
= 10,000(1.1)2
= 10,000(1.21)
= Rs. 12,100
2. Find the CI, if Rs 5000 was invested for 2 years at 10% p.a. compounded half-yearly?
Solution:
We know A = P(1+R/100)n
From given data P = 5,000
R = 10%
n = 2 years
Substituting the input values we have the equation as under
A = 5000(1+10/100)2
= 5000(1+0.1)2
=5000(1.1)2
= 5000(1.21)
= Rs. 6050
CI = A – P
= 6050 – 5000
= Rs. 1050
3. The CI on a sum of Rs 1000 in 2 years is Rs 440. Find the rate of interest?
Solution:
Given P = 1000
n = 2 years
CI = 150
We know CI = A – P
440 = A – 1000
A = 1440
R = ?
We know the formula for Amount A = P(1+R/100)n
Substitute the given values in the above formula
1440 = 1000(1+R/100)2
1440/1000 = (1+R/100)2
12/10 = 1+R/100
12/10 -1 = R/100
(12-10)/10 = R/100
2/10 = R/100
Rearranging we get the Rate of Interest as 20%.
4. The difference between SI and CI for 2 years at 10% per annum is Rs 15. What is the principal?
Solution:
We know the formula Difference = Â P (R/100)2
15 = P(10/100)2
15 = P(100/10000)
15 = P/100
Therefore, Principal = Rs 1500
5. A certain sum amounts to $ 7200 in 2 years at 6% per annum compound interest, compounded annually. Find the sum?
Solution:
Given Data A = $7200
n = 2 years
R = 6%
Formula to Calculate the Amount A = P(1+R/100)n
7200 = P(1+6/100)2
7200 = P(106/100)2
7200 = P(1.1236)
P = 7200/1.1236
= $ 6407
Therefore, the Sum is $6407.
6. A man deposited $100000 in a bank. In return, he got $133100. Bank gave interest 10% per annum. How long did he kept the money in the bank?
Solution:
Principal = $100000
A = $133100
R = 10%
n = ?
Formula to Calculate the Amount is A = P(1+R/100)n
Substitute the input values in the above formula and rearrange it to obtain the value of n
133100 = 100000(1+10/100)n
133100/100000 = (1+10/100)n
(11/10)3 = (110/100)n
(11/10)3 = (11/10)n
n= 3
Therefore, the man kept his money in the bank for 3 years.