Compound Interest Practice Test Set 1

Compounding occurs every 6 months, so the rate per period is 20%/2 = 10%.

Eighteen months contain 3 half-yearly periods. Amount factor = 1.1³ = 1.331.

For 2 years at 20% compounded annually, the amount factor is 1.2² = 1.44.

The compound interest is therefore 1.44P - $P = 0.44P$, or 44% of the principal.

A 60% increase in 4 years at simple interest means total simple interest over 4 years is 60% of the principal.

Annual rate = 60%/4 = 15%.

Given $P =$ ₹50,000, R = 5% and $n = 3 years$. Amount = P(1 + R/100)ⁿ.

Amount = 50,000 $\times 1.05³ = 50,000 \times 1.157625 =$ ₹57,881.25 .

The rate changes each year, so apply each year's growth factor separately.

$Amount = 25,000 \times (1 + 12/100) \times (1 + 10/100) = 25,000 \times 1.12 \times 1.10.$