CS Professional · Banking and Insurance - Laws and Practice · Calculation of Interest and Annuities
Rajesh deposits Rs 80,000 in a fixed deposit with a bank at 7.5% per annum simple interest for 2 years. What is the interest earned at maturity, assuming interest is paid only at maturity without compounding?
The interest is Rs 12,000. Under simple interest, interest equals principal times rate times time divided by 100, so 80,000 x 7.5 x 2 / 100 gives Rs 12,000. Rs 6,000 would be the interest for one year only.
- ARs 10,000
- BRs 12,000Correct
- CRs 6,000
- DRs 15,000
Explanation
Simple interest = P x R x T / 100 = 80,000 x 7.5 x 2 / 100 = Rs 12,000. Check: one year interest is 6,000, so two years is 12,000. Rs 6,000 is wrong because it covers only one year.
Did you get it right without looking?
One question tells you little. A timed set on Calculation of Interest and Annuities shows your real accuracy, how long you take and where you lose marks.
More Calculation of Interest and Annuities questions
- Kavita Enterprises borrows from a bank and will repay by equal year-end instalments over 2 years at 10% p.a. compound interest. The present …
- Iyer Pvt Ltd lends Rs 2,00,000 for 2 years. Under Option A the bank charges 9% simple interest; under Option B it charges 8% compounded annu…
- Sunil Traders is offered a perpetuity by a financial institution paying Rs 6,000 at the end of every year forever. If the discount rate is 8…
- Meera Textiles of Surat availed a term loan of ₹2,40,000 from a bank at 9% p.a. simple interest. She repaid the whole principal after exactl…
- Suresh has a home loan from a bank with a fixed monthly EMI on a reducing-balance basis at a constant interest rate. He compares his second …
- Sharma Exports deposits Rs 50,000 for 2 years at 10% p.a. compounded annually. Which amount is the maturity value, and by how much does it e…