Simple & Compound Interest: Practice Questions with Answers
Simple interest, compound interest and the difference between them. Try each question first: tap an option to check it, and the explanation appears below.
Question 1Hard
What is the compound interest on ₹30,000 for 3 years at 10% per year, compounded annually?
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✅ A. ₹9,930
Each year adds 10% of the amount at the start of that year. Year 1: ₹30,000 → ₹33,000. Year 2: ₹33,000 → ₹36,300. Year 3: ₹36,300 → ₹39,930. Compound interest = ₹39,930 − ₹30,000 = ₹9,930, which is 33.1% of the principal. Simple interest for 3 years would be only 30%, ₹9,000.
Question page →Question 2Medium
What will ₹2,150 amount to in 2 years at 20% per year compound interest, compounded annually?
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✅ C. ₹3,096
Amount = principal × (1 + rate/100)². After year 1: ₹2,150 × 120/100 = ₹2,580. After year 2: ₹2,580 × 120/100 = ₹3,096. With simple interest it would be only ₹3,010; compounding also earns interest on the first year's interest.
Question page →Question 3Easy
In how many years will ₹17,000 earn a simple interest of ₹12,240 at 12% per year?
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✅ B. 6 years
Interest for one year = 12% of ₹17,000 = ₹2,040. The total interest is ₹12,240, so the time = 12,240 ÷ 2,040 = 6 years. Using the formula: time = interest × 100 ÷ (principal × rate) = 12,240 × 100 ÷ (17,000 × 12) = 6.
Question page →Question 4Hard
A sum of money doubles itself in 8 years at compound interest. In how many years will it become 16 times itself?
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✅ C. 32 years
With compound interest the sum keeps doubling every 8 years: 2 times after 8 years, 4 times after 16, 8 times after 24, and so on. 16 = 2^4, so it takes 4 doublings: 4 × 8 = 32 years. Multiplying 8 by 16 (128 years) would be the simple-interest way of thinking, which does not apply here.
Question page →Question 5Hard
A sum of money doubles itself in 11 years at compound interest. In how many years will it become 16 times itself?
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✅ A. 44 years
With compound interest the sum keeps doubling every 11 years: 2 times after 11 years, 4 times after 22, 8 times after 33, and so on. 16 = 2^4, so it takes 4 doublings: 4 × 11 = 44 years. Multiplying 11 by 16 (176 years) would be the simple-interest way of thinking, which does not apply here.
Question page →Question 6Hard
What is the compound interest on ₹6,000 for 3 years at 10% per year, compounded annually?
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✅ A. ₹1,986
Each year adds 10% of the amount at the start of that year. Year 1: ₹6,000 → ₹6,600. Year 2: ₹6,600 → ₹7,260. Year 3: ₹7,260 → ₹7,986. Compound interest = ₹7,986 − ₹6,000 = ₹1,986, which is 33.1% of the principal. Simple interest for 3 years would be only 30%, ₹1,800.
Question page →Question 7Medium
What is the compound interest on ₹61,200 for 2 years at 5% per year, compounded annually?
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✅ A. ₹6,273
Year 1 interest = 5% of ₹61,200 = ₹3,060, so the amount becomes ₹64,260. Year 2 interest = 5% of ₹64,260 = ₹3,213. Total compound interest = ₹6,273. Simple interest would be only ₹6,120; the extra is interest earned on the first year's interest.
Question page →Question 8Easy
What is the simple interest on ₹10,000 at 10% per year for 3 years?
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✅ C. ₹3,000
Simple interest = principal × rate × time ÷ 100 = 10,000 × 10 × 3 ÷ 100 = ₹3,000. The interest is the same every year (₹1,000 per year). The total amount after 3 years would be ₹13,000, but the question asks only for the interest.
Question page →Question 9Easy
In how many years will ₹37,000 earn a simple interest of ₹4,440 at 4% per year?
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✅ D. 3 years
Interest for one year = 4% of ₹37,000 = ₹1,480. The total interest is ₹4,440, so the time = 4,440 ÷ 1,480 = 3 years. Using the formula: time = interest × 100 ÷ (principal × rate) = 4,440 × 100 ÷ (37,000 × 4) = 3.
Question page →Question 10Medium
A sum of ₹15,000 becomes ₹17,700 in 3 years at simple interest. What is the rate of interest per year?
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✅ C. 6%
Interest = amount − principal = ₹17,700 − ₹15,000 = ₹2,700. Rate = interest × 100 ÷ (principal × time) = 2,700 × 100 ÷ (15,000 × 3) = 6%. Check: 6% of ₹15,000 is ₹900 per year, and 3 years of that is ₹2,700.
Question page →Question 11Medium
A sum of ₹14,000 becomes ₹22,400 in 5 years at simple interest. What is the rate of interest per year?
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✅ C. 12%
Interest = amount − principal = ₹22,400 − ₹14,000 = ₹8,400. Rate = interest × 100 ÷ (principal × time) = 8,400 × 100 ÷ (14,000 × 5) = 12%. Check: 12% of ₹14,000 is ₹1,680 per year, and 5 years of that is ₹8,400.
Question page →Question 12Medium
What will ₹3,250 amount to in 2 years at 20% per year compound interest, compounded annually?
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✅ C. ₹4,680
Amount = principal × (1 + rate/100)². After year 1: ₹3,250 × 120/100 = ₹3,900. After year 2: ₹3,900 × 120/100 = ₹4,680. With simple interest it would be only ₹4,550; compounding also earns interest on the first year's interest.
Question page →Question 13Hard
A sum of money amounts to ₹1,49,940 in 2 years and to ₹1,57,437 in 3 years at compound interest. What is the rate of interest per year?
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✅ A. 5%
Between year 2 and year 3, the only change is one year's interest on ₹1,49,940: ₹1,57,437 − ₹1,49,940 = ₹7,497. So the rate = 7,497 ÷ 1,49,940 × 100 = 5%. Dividing by the larger amount instead gives 4.76%, which is wrong because interest is on the amount at the start of the year.
Question page →Question 14Medium
What is the difference between the compound interest and the simple interest on ₹8,800 for 2 years at 5% per year?
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✅ D. ₹22
For 2 years, compound interest is more than simple interest only because of the interest on the first year's interest. That extra = principal × (rate/100)² = 8,800 × (5/100)² = ₹22. You can check by working out both: simple interest is ₹880 and compound interest is ₹902.
Question page →Question 15Medium
The simple interest on a sum of money at 12% per year for 5 years is ₹3,000. What is the sum?
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✅ B. ₹5,000
Simple interest = principal × rate × time ÷ 100, so principal = interest × 100 ÷ (rate × time) = 3,000 × 100 ÷ (12 × 5) = ₹5,000. Check: 12% of ₹5,000 is ₹600 per year, and 5 years of that is ₹3,000.
Question page →Question 16Medium
What is the compound interest on ₹11,400 for 2 years at 10% per year, compounded annually?
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✅ D. ₹2,394
Year 1 interest = 10% of ₹11,400 = ₹1,140, so the amount becomes ₹12,540. Year 2 interest = 10% of ₹12,540 = ₹1,254. Total compound interest = ₹2,394. Simple interest would be only ₹2,280; the extra is interest earned on the first year's interest.
Question page →Question 17Hard
On a certain sum, the simple interest for 2 years is ₹1,550 and the compound interest for 2 years at the same rate is ₹1,581. What is the rate of interest?
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✅ C. 4%
Simple interest for one year = ₹1,550 ÷ 2 = ₹775. Compound interest is higher only because, in year 2, interest is also earned on year 1's interest: ₹1,581 − ₹1,550 = ₹31. That extra is the year-2 interest on ₹775, so the rate = 31 ÷ 775 × 100 = 4%. The principal is then ₹775 × 100 ÷ 4 = ₹19,375.
Question page →Question 18Hard
What is the compound interest on ₹31,000 for 3 years at 10% per year, compounded annually?
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✅ A. ₹10,261
Each year adds 10% of the amount at the start of that year. Year 1: ₹31,000 → ₹34,100. Year 2: ₹34,100 → ₹37,510. Year 3: ₹37,510 → ₹41,261. Compound interest = ₹41,261 − ₹31,000 = ₹10,261, which is 33.1% of the principal. Simple interest for 3 years would be only 30%, ₹9,300.
Question page →Question 19Hard
What is the compound interest on ₹22,000 for 3 years at 10% per year, compounded annually?
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✅ C. ₹7,282
Each year adds 10% of the amount at the start of that year. Year 1: ₹22,000 → ₹24,200. Year 2: ₹24,200 → ₹26,620. Year 3: ₹26,620 → ₹29,282. Compound interest = ₹29,282 − ₹22,000 = ₹7,282, which is 33.1% of the principal. Simple interest for 3 years would be only 30%, ₹6,600.
Question page →Question 20Easy
What is the simple interest on ₹7,000 at 8% per year for 5 years?
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✅ A. ₹2,800
Simple interest = principal × rate × time ÷ 100 = 7,000 × 8 × 5 ÷ 100 = ₹2,800. The interest is the same every year (₹560 per year). The total amount after 5 years would be ₹9,800, but the question asks only for the interest.
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