Simple and Compound Interest Questions with Answers: Quick Answer
These 20 simple and compound interest questions are original practice questions written for this page. They are not previous year questions and are not copied from any book, test series or website. Every answer was computed in code from the stated principal, rate and time, including the half-yearly and quarterly compounding questions, so the numbers below are exact. The set covers the questions SSC and bank exams actually ask: plain simple interest, compound interest, the CI minus SI difference, rate and time back-solving, and compounding more than once a year. Work each question with the formula box first, then check the solution. As of 2 November 2026.
If you need the method before the questions, read the simple and compound interest tricks for bank exams note and the simple interest and compound interest questions for SSC CGL note. The formula box below is the minimum you need to attempt this set.
Simple Interest and Compound Interest Formulas
Simple interest: SI = (P × R × T) ÷ 100, where P is the principal, R the rate per cent per year and T the time in years. Amount = P + SI. Simple interest grows by the same amount every year, because it is always charged on the original principal.
Compound interest: Amount = P × (1 + R ÷ 100)^T, and CI = Amount − P. Compound interest grows faster, because each year's interest is charged on the principal plus the interest already earned.
CI minus SI for 2 years: Difference = P × (R ÷ 100)^2. For 3 years: Difference = P × (R ÷ 100)^2 × (3 + R ÷ 100). These two shortcuts answer most difference questions in one line.
Compounding more than once a year: divide the annual rate by the number of periods in a year and multiply the number of years by the same number. Half-yearly at 20% means 10% per half-year for 2 periods in one year; quarterly at 20% means 5% per quarter for 4 periods in one year.
| Situation | Use |
|---|---|
| Same amount every year | Simple interest |
| Interest on interest | Compound interest |
| 2-year difference | P × (R ÷ 100)^2 |
| Half-yearly | Rate ÷ 2, time × 2 |
| Quarterly | Rate ÷ 4, time × 4 |
| 1 year only | CI = SI (no second year to compound) |
20 Simple and Compound Interest Questions with Answers and Solutions
Q1. Find the simple interest on ₹5,000 at 10% per annum for 2 years.
(A) ₹900 (B) ₹1,000 (C) ₹1,100 (D) ₹1,200
Answer: (B) ₹1,000.
SI = (5,000 × 10 × 2) ÷ 100 = ₹1,000. Each year earns ₹500, and two years earn twice that.
Q2. Find the compound interest on ₹8,000 at 10% per annum for 2 years, compounded annually.
(A) ₹1,520 (B) ₹1,600 (C) ₹1,680 (D) ₹1,760
Answer: (C) ₹1,680.
Amount = 8,000 × (1.10)^2 = 8,000 × 1.21 = ₹9,680. CI = 9,680 − 8,000 = ₹1,680. The extra ₹80 over simple interest is the interest on the first year's ₹800.
Q3. The difference between compound interest and simple interest on ₹12,000 at 10% per annum for 2 years is:
(A) ₹100 (B) ₹120 (C) ₹150 (D) ₹200
Answer: (B) ₹120.
Difference = P × (R ÷ 100)^2 = 12,000 × (0.10)^2 = 12,000 × 0.01 = ₹120. This is exactly the second year's interest on the first year's simple interest of ₹1,200.
Q4. Find the compound interest on ₹10,000 at 20% per annum for 1 year, compounded half-yearly.
(A) ₹2,000 (B) ₹2,100 (C) ₹2,200 (D) ₹2,400
Answer: (B) ₹2,100.
Half-yearly, the rate is 10% per period for 2 periods. Amount = 10,000 × (1.10)^2 = ₹12,100. CI = ₹2,100. Annual compounding would give only ₹2,000, so the half-yearly answer must be higher — option (A) is the trap.
Q5. Find the compound interest on ₹16,000 at 20% per annum for 9 months, compounded quarterly.
(A) ₹2,400 (B) ₹2,522 (C) ₹2,600 (D) ₹2,480
Answer: (B) ₹2,522.
Quarterly, the rate is 5% per period for 3 periods. Amount = 16,000 × (1.05)^3 = 16,000 × 1.157625 = ₹18,522. CI = 18,522 − 16,000 = ₹2,522.
Q6. A sum of ₹7,500 is lent at 8% simple interest per annum for 3 years. What is the amount at the end?
(A) ₹9,000 (B) ₹9,300 (C) ₹9,600 (D) ₹8,700
Answer: (B) ₹9,300.
SI = (7,500 × 8 × 3) ÷ 100 = ₹1,800. Amount = 7,500 + 1,800 = ₹9,300.
Q7. Simple interest of ₹2,160 is earned on ₹9,000 in 4 years. What is the rate per cent per annum?
(A) 5% (B) 6% (C) 7% (D) 8%
Answer: (B) 6%.
R = (SI × 100) ÷ (P × T) = (2,160 × 100) ÷ (9,000 × 4) = 216,000 ÷ 36,000 = 6%.
Q8. In how many years will ₹5,000 earn ₹1,500 simple interest at 6% per annum?
(A) 4 years (B) 5 years (C) 6 years (D) 3 years
Answer: (B) 5 years.
T = (SI × 100) ÷ (P × R) = (1,500 × 100) ÷ (5,000 × 6) = 150,000 ÷ 30,000 = 5 years.
Q9. The difference between compound interest and simple interest on ₹10,000 at 10% per annum for 3 years is:
(A) ₹300 (B) ₹310 (C) ₹331 (D) ₹290
Answer: (B) ₹310.
Difference = P × (R ÷ 100)^2 × (3 + R ÷ 100) = 10,000 × 0.01 × 3.1 = ₹310. Check: CI = 10,000 × (1.331 − 1) = ₹3,310; SI = ₹3,000; difference = ₹310.
Q10. In how many years will a sum double itself at 12.5% simple interest per annum?
(A) 6 years (B) 7 years (C) 8 years (D) 10 years
Answer: (C) 8 years.
Doubling needs SI equal to the principal. T = (100) ÷ R = 100 ÷ 12.5 = 8 years. For example, ₹4,000 earns ₹500 a year at 12.5%, reaching ₹4,000 of interest in 8 years.
Q11. Find the amount on ₹20,000 at 15% per annum compound interest for 2 years.
(A) ₹25,450 (B) ₹26,450 (C) ₹26,000 (D) ₹24,500
Answer: (B) ₹26,450.
Amount = 20,000 × (1.15)^2 = 20,000 × 1.3225 = ₹26,450. The compound interest is ₹6,450.
Q12. The difference between compound interest and simple interest for 2 years at 8% per annum is ₹48. What is the principal?
(A) ₹7,000 (B) ₹7,500 (C) ₹8,000 (D) ₹6,500
Answer: (B) ₹7,500.
Difference = P × (0.08)^2 = P × 0.0064 = 48, so P = 48 ÷ 0.0064 = ₹7,500.
Q13. On ₹6,000 at 12% per annum for 2 years, find the simple interest, the compound interest, and the difference between them.
(A) SI ₹1,440, CI ₹1,526.40, difference ₹86.40 (B) SI ₹1,440, CI ₹1,440, difference ₹0 (C) SI ₹1,500, CI ₹1,600, difference ₹100 (D) SI ₹1,440, CI ₹1,600, difference ₹160
Answer: (A) SI ₹1,440, CI ₹1,526.40, difference ₹86.40.
SI = (6,000 × 12 × 2) ÷ 100 = ₹1,440. CI = 6,000 × (1.2544 − 1) = ₹1,526.40. Difference = ₹86.40, which also equals 6,000 × (0.12)^2.
Q14. A nominal rate of 10% per annum compounded half-yearly is equal to what effective annual rate?
(A) 10% (B) 10.20% (C) 10.25% (D) 10.50%
Answer: (C) 10.25%.
Half-yearly compounding at 10% means 5% per half-year: (1.05)^2 − 1 = 1.1025 − 1 = 10.25%. On ₹10,000 that is ₹1,025 of interest in a year, not ₹1,000.
Q15. Find the compound interest on ₹6,250 at 8% per annum for 2 years, compounded annually.
(A) ₹1,000 (B) ₹1,040 (C) ₹1,080 (D) ₹960
Answer: (B) ₹1,040.
Amount = 6,250 × (1.08)^2 = 6,250 × 1.1664 = ₹7,290. CI = 7,290 − 6,250 = ₹1,040.
Q16. A sum lent at 10% simple interest per annum amounts to ₹9,000 in 5 years. What is the sum?
(A) ₹5,500 (B) ₹6,000 (C) ₹6,500 (D) ₹5,000
Answer: (B) ₹6,000.
In 5 years at 10%, simple interest is 50% of the principal, so the amount is 150% of the principal. Principal = 9,000 ÷ 1.5 = ₹6,000. Check: SI = ₹3,000, amount = ₹9,000.
Q17. Find the compound interest and the simple interest on ₹5,000 at 20% per annum for 1 year.
(A) CI ₹1,000, SI ₹1,200 (B) CI ₹1,000, SI ₹1,000 (C) CI ₹1,200, SI ₹1,000 (D) CI ₹1,100, SI ₹1,000
Answer: (B) CI ₹1,000, SI ₹1,000.
For one year there is no second year for interest to compound on, so CI equals SI: (5,000 × 20 × 1) ÷ 100 = ₹1,000 either way. The difference between CI and SI only appears from the second year onwards.
Q18. ₹8,000 amounts to ₹9,680 in 2 years at compound interest. What is the rate per cent per annum?
(A) 8% (B) 9% (C) 10% (D) 12%
Answer: (C) 10%.
9,680 ÷ 8,000 = 1.21, and the square root of 1.21 is 1.10, so the rate is 10% per annum. Check: 8,000 × (1.10)^2 = ₹9,680.
Q19. Find the compound interest on ₹20,000 at 8% per annum for 2 years, compounded half-yearly.
(A) ₹3,200 (B) ₹3,397.17 (C) ₹3,400 (D) ₹3,360
Answer: (B) ₹3,397.17.
Half-yearly, the rate is 4% per period for 4 periods. Amount = 20,000 × (1.04)^4 = 20,000 × 1.16985856 = ₹23,397.17. CI = ₹3,397.17. Annual compounding would give ₹3,328, so the answer must be slightly higher than that.
Q20. Find the simple interest on ₹3,600 at 15% per annum for 2 years 4 months.
(A) ₹1,200 (B) ₹1,260 (C) ₹1,300 (D) ₹1,080
Answer: (B) ₹1,260.
2 years 4 months is 7/3 years. SI = (3,600 × 15 × 7/3) ÷ 100 = ₹1,260. Convert months to a fraction of a year first — 4 months is 1/3 of a year, not 0.4.
Simple and Compound Interest Questions FAQs
What is the difference between simple interest and compound interest?
Simple interest is always charged on the original principal, so it grows by the same amount each year. Compound interest is charged on the principal plus the interest earned so far, so it grows faster. The two are equal only in the first year.
What is the shortcut for CI minus SI in 2 years?
Difference = P × (R ÷ 100)^2. For example, at 10% the difference is always 1% of the principal, whatever the principal is. For 3 years, multiply further by (3 + R ÷ 100), as in Q9 above.
How do you solve half-yearly compounding questions?
Halve the annual rate and double the number of periods. At 20% for 1 year half-yearly, use 10% for 2 periods. At 8% for 2 years half-yearly, use 4% for 4 periods. The same rule with quarters gives rate ÷ 4 and periods × 4.
Why is CI equal to SI for 1 year?
Because compounding needs a second period to act on. In the first year, interest is charged on the principal alone under both methods. The difference appears only when the second year's interest is charged on the first year's interest as well.
Which questions in this set are most asked in bank exams?
The CI minus SI difference (Q3, Q9, Q12), half-yearly and quarterly compounding (Q4, Q5, Q19), and rate or time back-solving (Q7, Q8, Q18) appear in almost every IBPS and SBI Prelims and Mains paper. Practise them until the shortcut is automatic.