Interview Q&A / Aptitude

1. What is the difference between simple interest and compound interest?

   Simple interest is calculated only on the original principal, so it is the same every year (SI = P x R x T / 100). Compound interest is calculated on the principal plus the interest already earned, so it grows every year (A = P x (1 + R/100)^T). For 2 years, the difference is P x (R/100)^2.

   BeginnerIn-depth4 min read
2. What is the compound interest on ₹10,000 for 1 year at 10% per annum, compounded half-yearly?

   ₹1,025. Half-yearly compounding means 5% per half-year for 2 periods: 10,000 x 1.05 x 1.05 = ₹11,025, so CI = ₹1,025, which is ₹25 more than yearly compounding.

   BeginnerQuick answer1 min read
3. What is the difference between compound interest and simple interest on ₹5,000 for 2 years at 8% per annum?

   ₹32. For 2 years the difference is P x (R/100)^2 = 5,000 x 0.08 x 0.08 = ₹32. It is the interest earned in year 2 on year 1's interest.

   BeginnerQuick answer1 min read
4. A sum at compound interest amounts to ₹6,050 in 2 years and ₹6,655 in 3 years. Find the rate and the principal.

   Rate = 10% and principal = ₹5,000. The third year's interest is 6,655 - 6,050 = ₹605, which is 10% of ₹6,050. Then P = 6,050 / (1.1)^2 = 6,050 / 1.21 = ₹5,000.

   IntermediateQuick answer1 min read
5. What is the rule of 72, and how long does money take to double at 9% compound interest?

   Doubling time is roughly 72 divided by the annual rate in percent. At 9% that is 72 / 9 = 8 years. The exact answer is log 2 / log 1.09, about 8.04 years, so the rule is very close.

   IntermediateQuick answer1 min read