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. A sum at simple interest amounts to ₹7,200 in 2 years and ₹8,400 in 4 years. Find the principal and the rate.

   Principal ₹6,000 and rate 10% per year. Two extra years added ₹1,200, so yearly interest is ₹600. Two years of interest is ₹1,200, so P = 7,200 - 1,200 = ₹6,000, and R = 600/6,000 = 10%.

   BeginnerQuick answer1 min read
3. A sum doubles itself in 8 years at simple interest. What is the rate, and in how many years will it become three times?

   The rate is 12.5% per year, because the interest in 8 years equals the principal: 100% / 8 = 12.5%. To triple, the interest must be 200% of the principal, which takes 200 / 12.5 = 16 years.

   BeginnerQuick answer1 min read
4. 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
5. 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
6. ₹10,000 is lent partly at 8% and partly at 12% simple interest. The total interest for one year is ₹960. How much was lent at each rate?

   ₹6,000 at 8% and ₹4,000 at 12%. The overall rate is 960/10,000 = 9.6%. Alligation gives (12 - 9.6) : (9.6 - 8) = 2.4 : 1.6 = 3 : 2.

   IntermediateQuick answer1 min read
7. 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
8. 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