Pariksha SaathiSimple & Compound Interest Questions with Solutions
Interest questions are about keeping one distinction straight: simple interest is the same amount every year, compound interest grows on top of itself. Here’s the concept, four fully worked examples, and a few to try yourself.
The concept, quickly
- Simple Interest (SI) = (P × R × T) / 100, where P is principal, R is the annual rate, T is time in years. Amount = P + SI.
- Compound Interest (CI), compounded annually: Amount = P × (1 + R/100)ᵀ. CI = Amount − P.
- For the same P, R and T, CI is always ≥ SI — interest earning interest. For 2 years specifically, CI − SI = P × (R/100)², a useful shortcut.
Worked examples
1. Find the simple interest on ₹5,000 at 8% per annum for 3 years.
Solution
- SI = (P × R × T) / 100
- = (5,000 × 8 × 3) / 100
- = 1,200
Answer: ₹1,200
2. A sum of ₹8,000 amounts to ₹9,440 in 3 years at simple interest. Find the rate of interest per annum.
Solution
- SI = 9,440 − 8,000 = 1,440
- R = (SI × 100) / (P × T) = (1,440 × 100) / (8,000 × 3)
- = 144,000 / 24,000 = 6%
Answer: 6% per annum
3. Find the compound interest on ₹10,000 for 2 years at 10% per annum, compounded annually.
Solution
- Amount = 10,000 × (1.10)²
- = 10,000 × 1.21 = 12,100
- CI = 12,100 − 10,000 = 2,100
Answer: ₹2,100
4. Find the difference between the compound interest and simple interest on ₹15,000 for 2 years at 10% per annum.
Solution
- SI = (15,000 × 10 × 2) / 100 = 3,000
- CI: Amount = 15,000 × (1.10)² = 15,000 × 1.21 = 18,150, so CI = 3,150
- Difference = 3,150 − 3,000 = 150
- Shortcut check: P × (R/100)² = 15,000 × 0.01 = 150 — matches, for 2 years only.
Answer: ₹150
Try these yourself
Work through these the same way, then check against the answer.
1. Find the simple interest on ₹12,000 at 5% per annum for 4 years.
Answer: ₹2,400
2. A sum amounts to ₹6,600 in 4 years at 5% simple interest per annum. Find the principal.
Answer: ₹5,500
3. Find the compound interest on ₹20,000 for 2 years at 5% per annum, compounded annually.
Answer: ₹2,050
Where this comes up
Simple and Compound Interest are tested directly in the Quantitative/Numerical Aptitude section of every exam Pariksha Saathi covers — SSC CGL, SSC MTS, SSC CHSL, IBPS PO, IBPS Clerk, SBI PO and SBI Clerk — and the underlying concept shows up in Banking Awareness questions too.
Practice more Interest questions
This page covers the concept and a handful of worked examples. Pariksha Saathi has full topic-wise practice sets for Simple & Compound Interest (and every other Quant/Reasoning/English topic) with instant scoring and explanations — free, no account required.
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