SAMPLE PROBLEMS ON UNIT 1

PROBLEMS ON SIMPLE INTEREST

1. Find the Simple Interest, if the principal amount is Rs. 2000, time period
is 1 year and rate is 10%.

2. A sum of Rs 4000 is borrowed at the rate of 7%. What is the simple Interest
for 2
years?

3. Find the simple interest on 4000 invested at 6% for three years

4. Find the maturity value of 7000 rupees invested at 3% for 5 years

5. Find the principal on an investment that earned 480/- at 3% interest for 2

years

6. If a five year investment instrument on 6000/- yields 1500/- interest what

is the rate?

7. Find the principal if an instrument earns 560/- at an interest of 7% over 4

years.

8. How long does it take for 8000/- to grow to 9600/- at 4% interest?

9. If you invest 9000/- at 2% for 6 months, find the Maturity Value.

10.If you borrow 1800 at 7% for 3 months, how much will you pay back?

11.How much interest is earned on 5000 invested at 3% for 120 days?

12.Find the Maturity value of 12000 invested at 6% exact interest for 180
days

13.Find the Maturity Value of 3500 loaned at 7% for 60 days.

14.A 100day loan earns 62.5/- in exact interest on a principal of 1800/- Find
the interest rate?

15.How long would it take for 800 rupees to double at 9% ordinary interest?
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 PROBLEMS ON COMPOUND INTEREST

1. A sum of Rs. 50,000 is borrowed and the rate of interest is 10%. What is
the compound interest for 5 years?

2. Find the compound interest on 25000 for 3 years at 6% per annum,

compounded annually.

3. Find the compound interest on Rs. 10000 at 12% rate of interest for 1
year, compounded half-yearly.

4. Find the compound interest on 10000 for 2 year at 10% per annum,
compounded half-yearly

5. Find the compound interest on 125000, if Mike took loan from a bank
for 9 months at 8 % per annum, compounded quarterly.

6. If you start a bank account with 10,000 and your bank compounds the
interest quarterly at an interest rate of 8%, how much money do you have
at the year's end? (assume that you do not add or withdraw any money
from the account)

7. You have Rupees 1,000,00. You decide that you want to invest all of the
money in a savings account. However, your bank has two different plans.
In 5 years from now, which plan will provide you with more money

a. The bank gives you a 6% interest rate and compounds the interest
each month
b. The bank gives you a 12% interest rate and compounds the interest
every 2 months.

8. How much amount of total interest is payable on a principal sum of

25,000 at 5% rate of interest for the total period of 3 years with monthly
compounding frequency or period?

9. Find the compound interest on 15625 for 1¹/₂ years at 8 % per annum
when compounded half-yearly.

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10.Find the amount of 12000 after 2 years, compounded annually; the rate
of interest being 5 % p.a. during the first year and 6 % p.a. during the
second year. Also, find the compound interest.

11.Vijay invests 50000 into a deposit which pays an average 8.4 percent per
year compounded semi-annually. At this rate hoe many years will it take
for his account to reach 1000000?

12.Vijay wishes to turn his 10000 investment into 100000 in 20 years. What
rate of interest he needs to receive if the amount is compounded annually
to reach his goal.

13.Mr Vijay has borrowed a sum of 50000 for a period starting from 1st
January 2018 to 30th April 2019. The rate of interest is 15% annually.
Determine the total amount of money Vijay has to repay at the end of the
period using ordinary and exact SI.

14.An amount of Rupees 1000000/- was borrowed for a period of ten years
at a nominal interest rate of 14% compounded monthly. Find the amount
of money that has to be paid at the end of the period. What is the effective
rate?

15.If you deposit 4000 into an account paying 6% annual interest

compounded quarterly, how much money will be in the account after 5
years?

16.If you deposit 6500 into an account paying 8% annual interest

compounded monthly, how much money will be in the account after 7
years?

17.How much money would you need to deposit today at 9% annual interest
compounded monthly to have 12000 in the account after 6 years?

18.If you deposit 5000 into an account paying 6% annual interest

compounded monthly, how long until there is 8000 in the account?

19.If you deposit 8000 into an account paying 7% annual interest

compounded quarterly, how long until there is 12400 in the account?
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20.At 3% annual interest compounded monthly, how long will it take to
double your money of 100?

PROBLEMS ON INTEREST FACTORS

1. A person deposits a sum of Rupees 20000/- invested now at 18%

compounded annually for 10 years. Find the maturity value after 10 years.

2. Rupees 10000 is invested at 16% interest compounded annually. What is

the compound amount at the end of fourth year?

3. A person wishes to have a future sum of Rupees 100000/- for his son’s
education after 10 years from now. What is the single payment that he
should deposit now so that he gets the desired amount after 10 years?
The bank gives 15 % interest compounded annually.

4. How much money must be invested at 16% compounded annually so that

18110 can be received 4 years hence?

5. A person who is now 35 years old is planning for his retired life. He plans
to invest an equal sum of 10000 Rupees at the end of every year for the
next 25 years starting from the end of next year. The bank gives 20%
interest rate compounding annually. Find the maturity value of his
account when he is 60 years old.

6. A series of 5, 1000/- rupees are made at the end of each year at 12%
interest compounded annually .Find the future worth.

7. A company has to replace a present facility after 15 years at an outlay of

Rs 500000/-. It plans to deposit an equal amount at the end of every year
for the next fifteen years at a rate of 18% compounded annually. Find the
equivalent amount that must be deposited at the end of every year for
the nest fifteen years.

8. It is desired to accumulate 6350/- by making a series of five equal annual

payments at 12% interest compounded annually. Find the equivalent

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 amount that must be deposited at the end of every year for the next five
years.

9. What equal annual payment must be deposited into a sinking fund to

accumulate Rupees 60000 in 20 years at 13% interest compounded
annually?

10.A company wants to set up a reserve which will help the company to have
an annual equivalent amount of 1000000 for the next 20 years towards
its employee’s welfare measures. The reserve is assumed to grow at the
rate of 15% annually. Find the present worth of the reserve fund.

11.Determine the present worth of a series of eight equal annual payments

of Rupees 2230/- at an annual rate of 15% compounded annually.

12.The bank gives a loan to a company to purchase an equipment worth

Rupees 1000000 at an interest rate of 18% compounded annually. This
amount should be repaid in 15 yearly equal instalments. Find the
instalment amount that the company has to pay to the bank.

13.Rupees 10000/ is invested in a company at 15% interest compounded

annually. The amount is paid in eight equal year end instalments. Find the
instalment amount that the company has to pay.

14.A working woman is planning for her retired life. She has 20 more years
of service. She would like to deposit 10% of her salary which is Rs 5000/-
at the end of the first year and thereafter she wishes to deposit the same
amount 5000 with an annual increase of Rs 1000/-for the next 14 years
with an interest rate of 18%.Find the total amount at the end of the 15th
year for the above series.

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 PROBLEMS ON EFFECTIVE INTEREST RATES

1. A person invests a sum of Rs 5000 in a bank at a nominal interest rate of

12% for 10 years. The compounding is done quarterly. Find the maturity
amount of the deposit after 10 years after calculating the effective
interest rate.

2. A person invests a sum of Rs 50000 in a bank at a nominal interest rate of

18% for 15 years. The compounding is done monthly. Find the effective
interest rate.

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