Simple and Compound Interest Most Expected Questions For SBI PO Exam

Simple and Compound Interest For SBI PO Exam: The SBI PO exam is one of the most sought banking exams in India, and the Quantitative Aptitude section plays an important role in your success. Simple Interest (SI) and Compound Interest (CI) are among the key topics that every year appear in the exam. This article provides an overview of the SBI PO Simple interest and compound interest along with the free mock test and important questions and their detailed solution. Candidates can check all details about Simple and Compound interest in the article below.

What is Simple and Compound Interest

Simple Interest

Simple Interest is calculated on the original principal amount for the entire duration of the loan or investment. The formula for calculating Simple Interest is:

Where:

• P = Principal (initial amount of money)
• R = Rate of interest per annum
• T = Time period (in years)

Compound Interest

Compound interest is calculated on the principal amount and the interest that accumulates over time. This means that the interest earned each period is added to the principal amount, and interest is calculated on this new amount.

Simple & Compound Formula

Compound interest:
Interest = Amount – Principal

If Rs. ‘P’ is invested at a rate of ‘r%’ p.a. compounded annually for ‘t’ years, then the amount received after ‘t’ years will be = P × {1 + (r/100)}^t

If the interest is not compounded annually, then

Effective rate of interest = Actual rate ÷ Number of times the interest is compounded in a year

Effective time period = Actual time period × Number of times the interest is compounded in a year

Simple interest:

If Rs. ‘P’ is invested at simple interest of ‘r%’ p.a. for ‘t’ years, then the amount received after ‘t’ years will be = P + {(P × r × t)/100}

And, the simple interest received = {(P × r × t)/100}

Relationship between simple interest (SI) and compound interest (CI):

When a principal (P) is invested at the rate of ‘r%’ p.a., then

Difference between SI and CI after two years = P × (r/100)² 

Difference between SI and CI after three years = P × (r/100)² × {(r/100) + 3}

Simple and Compound Interest Important Question PDF Link

Question 1: Find the difference between the compound interest and simple earned by a man, if he lent Rs. 64000 at the rate of 10% interest in both types of interest for 3 years.

A) Rs. 2012

B) Rs. 1632

C) Rs. 1848

D) Rs. 1984

E) Rs. 1932

Question 2: The total amount earned by the man from a scheme which offers simple interest at the end of 4^th year and 5^th year is Rs. 7984 and Rs. 8108 respectively. Find the amount invested by him in the scheme.

A) Rs. 7488

B) Rs. 7546

C) Rs. 7396

D) Rs. 7244

E) None of these

Question 3: Amir invested Rs. 18,000 in a scheme offering 20% compound interest for two years compounded annually. Find the interest earned by him.

A) Rs. 7,820

B) Rs. 7,920

C) Rs. 8,020

D) Rs. 8,120

E) None of these

Question 4: Raman deposited Rs. 16000 at 20% per annum compound interest and Rs. 12000 at 30% simple interest per annum. What will be the difference in the interest after completion of 2 years?

A) Rs. 180

B) Rs. 160

C) Rs. 120

D) Rs. 140

E) Rs. 150

Simple and Compound Interest Important Question PDF Link

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