By how much does compound interest exceed simple interest on Rs. 20,000 at 5% per annum for 3 years?
Correct answer: C. Rs. 152.50
- A. Rs. 100.00
- B. Rs. 150.00
- C. Rs. 152.50
- D. Rs. 162.50
Explanation
Simple interest is Rs. 3,000, while compound interest is 20,000[(1.05)^3 − 1] = Rs. 3,152.50. Therefore, compound interest exceeds simple interest by Rs. 152.50.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? support@testustad.com
Practise Financial Mathematics: Interest, Annuities and Discounting
30 free Financial Mathematics: Interest, Annuities and Discounting MCQs from Quantitative Methods, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Quantitative Methods questions like this
Quantitative Methods is on this paper prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for it.
More Financial Mathematics: Interest, Annuities and Discounting questions
What is the amount after one year on Rs. 10,000 at a nominal rate of 8% per annum compounded quarterly?
What is the total amount of Rs. 8,000 invested at simple interest of 6% per annum for 2.5 years?
A bill of Rs. 10,000 is discounted at a simple discount rate of 8% for 9 months. What proceeds are received?
What is the present value of an annuity due paying Rs. 1,000 at the beginning of each year for 3 years at 10% interest?
An annuity pays Rs. 1,000 at the end of each year for three years, with the first payment at the end of year 3. At 10% interest, what is its value today?
What equal annual deposit is required at the end of each year to accumulate Rs. 50,000 in 5 years at 8% interest?