MULTIPLE CHOICE QUESTIONS (M.C.Q.

)
Pick up the Correct answer from each of the following question.
1. The sum of money that amounts to Rs.1,110 in 10 years at the rate of 5% simple interest
will be –
(a) Rs.700 (b) Rs.740 (c) Rs.760 (d) Rs.780

3
2. The simple interest on Rs.15,300 from 3rd March, 1997 to 27th July, 1997 at 3 % per
4
annum is –
(a) Rs.224.50 (b) Rs.229.50 (c) Rs.234.50 (d) Rs.274.50
3. In how many years a sum will be doubled at 12% per annum at simple interest ?
1 1
(a) 6 years (b) 7 years (c) 8 years (d) 8 years
3 2

4. The compound interest on Rs.10,000 at 20% per annum at the end of 1 year 6 months if
the interest is calculated half yearly will –
(a) Rs.3,000 (b) Rs.3,300 (c) Rs.3,310 (d) Rs.3,330.

5. The principal for which the difference of simple interest and compound interest at 10%
per annum is Rs.100 in 2 years, is –
(a) Rs.8,000 (b) Rs.10,000 (c) Rs.12,000 (d) Rs.14,000.

6. A sum of money invested at compound interest becomes Rs.1,020 after 3 years and
Rs.1,088 after 4 years. The rate of interest is –
(a) 5.60% (b) 6.66% (c) 7.66% (d) 8.66%.

7. The difference between S.I. and C.I. on a sum for 2 years at 8% per annum is Rs.160. If
the interest were compounded half yearly, the difference in interest in two years will be
nearly –
(a) Rs.246.50 (b) Rs.240 (c) Rs.168 (d) Rs.160.

8. A certain sum invested at compound interest becomes Rs.6,500 after a period of 6 years
and Rs.7,800 after a further period of 2 more years. The amount due after a further
period of 2 more years is –
(a) Rs.9,360 (b) 6,500 (c) Rs.9,100 (d) Rs.9,390.

9. In how many years at compound interest, will a sum of money become 27 times when it
trebles itself in 2 years at compound interest ?
1
(a) 9 years (b) 6 years (c) 12 years (d) 13 years
2

10. To
11. X, Y and Z are the three sums of money such that Y is the simple interest on X and Z is
the simple interest on Y for the same time and rate. The relation between X, Y and Z is –
(a) x2 = Y Z (b) Y2 = Z X (c) Z2 = X Y (d) XYZ = 1

12. If
13. A sum of Rs.79,300 was divided into three parts such that their amounts after 2, 3 and 4
years at 10% simple interest were equal. The ratio between the three parts is –
1 1 1 1 1 1
(a) 2 : 3 : 4 (b) 12 : 13 : 14 (c) : : (d) : :
2 3 4 12 13 14

14. Sunil lent a sum of money at 4 percent simple interest. In 8 years the interest amounted
to Rs.3,400 less than the sum lent. The sum lent was –
(a) Rs.7,000 (b) Rs.5,000 (c) Rs.5,700 (d) Rs.6,000.
15. The simple interest on a certain sum for 14 months at 6 percent per annum is Rs.25
more than the simple interest on the same sum for 8 months at 8 percent. The sum
borrowed is –
(a) Rs.1,500 (b) Rs.1,700 (c) Rs.2,000 (d) Rs.2,500.

16. An amount of money fetches a simple interest of Rs.4,320 at the rate of 4 percent per
annum at the end of 6 years. What is the principal amount ?
(a) Rs.24,000 (b) Rs.12,000
(c) Rs.18,000 (d) Rs.20,000

17. Suresh wishes to earn a monthly interest of Rs.600. The interest rate is 12 percent per
annum but it is paid every month. He must invest –
(a) Rs.80,000 (b) Rs.60,000 (c) Rs.90,000 (d) Rs.1,20,000.

18. John borrowed Rs.1,00,000 at 10 percent per annum simple interest. He immediately
lent the whole sum at 10 percent per annum compound interest. At the end of 2 years,
he would gain –
(a) Rs.1,000 (b) Rs.1,800 (c) Rs.2,000 (d) Rs.100.

19. Arun and Ajay borrowed Rs.400 each at 10% interest per annum. Arun borrowed at
compound interest while Ajay borrowed at simple interest. In both the cases, the interest
was calculated half yearly. At the end of one year –
(a) Both paid the same amount as interest (b) Arun paid Rs.1 more as interest
(c) Ajay paid Rs.5 more as interest (d) Ajay paid Rs.5 less as interest.

20. A sum of money is invested at 3 percent and a second sum twice as large as the first is
1 1
invested at 2 percent. Total interest is Rs.448 per year. The sum invested at 2
2 2
percent is –
(a) Rs.5,600 (b) Rs.12,000 (c) Rs.11,200 (d) Rs.11,000

21. Atul lent a sum of money at simple interest. The sum trebled in 16 years. The interest
rate was –
(a) 10 percent (b) 8 percent (c) 16 percent (d) 12.5 percent
22. Nishtha borrowed Rs.1,000 at 10 percent per annum simple interest from a co-operative
society on January 1, 1997. She cleared the loan by paying Rs.1,020. The amount was
paid on –
(a) March 15, 1997 (b) March 13, 1997 (c) March 16, 1997 (d) March 14, 1997

23. Sohan borrows Rs.3,000 at 5 percent and Rs.4,500 at 6 percent at the same time and on
the condition that the whole loan will be repaid when the interest amounts to Rs.1,260.
The loan will have to be repaid after –
(a) 6 years (b) 3 years (c) 5 years (d) 2 years.

24. If an amount doubles itself in 5 years at simple interest, it will become three times in –
(a) 10 years (b) 12 years (c) 8 years (d) None of these

25. The difference between simple interest and compound interest on a sum of money for 2
years at 5% is Rs.25. The sum is –
(a) Rs.8,000 (b) Rs.9,000 (c) Rs.10,000 (d) Rs.15,000

26. A sum of money becomes Rs.6,500 after 3 years and Rs.10,562.50 after 6 years on
compound interest. The sum is –
(a) Rs.4,000 (b) Rs.4,500 (c) Rs.4,800 (d) None of these

27. Simple interest on a certain sum at the rate of 4.5% per annum for 4 years and 6 years
differs by Rs.216. The sum is –
(a) Rs.2,400 (b) Rs.2,100 (c) Rs.3,900 (d) Rs.1,800
 2
28. Meenakshi gets 16 % simple interest on her fixed deposits. Her interest will be equal to
3
the deposit in …………… years –
(a) 8 (b) 8.5 (c) 6 (d) 6.25

29. Rs.12,500 lent at compound interest for two years at 10% per annum fetches Rs……
more, if the interest was payable half yearly than if it was payable annually –
(a) zero (b) Rs.10.48 (c) Rs.38.50 (d) Rs.68.82

30. Two friends Gita and Renu invested a total of Rs.60,000 together at compound interest
at 12.5 % per annum in such a way that Gita gets the same amount after two years what
Renu gets after five years. Gita’s investment is more than that of Renu by nearly –
(a) Rs.10,492 (b) Rs.12,470 (c) Rs.12,890 (d) None of these

1 5
31. The simple interest on a certain sum of money at 3 % per annum for 2 years is
2 21
Rs.658. The sum is –
(a) Rs.7,480 (b) Rs.7,840 (c) Rs.8,120 (d) Rs.8,400.

32. What will be the difference between simple and compound interest on Rs.8,000 at the
rate of 5 percent per annum at the end of 3 years ?
(a) Rs.61.00 (b) Rs.122.00 (c) Rs.91.50 (d) Rs.152.50

1 1
33. th of a sum is invested at 3% simple interest, rd at 4% and the remainder at 5%. If
4 3
the total yearly interest is Rs.150, the sum is –
(a) Rs.4,000 (b) Rs.3,600 (c) Rs.3,000 (d) Rs.5,000

34. Harish purchased a cycle and he was to pay total of Rs.1,575 in three years. If the rate
of interest is 5%, he should pay annual instalment of Rs. ……….. to complete his
payment.
(a) 500 (b) 525 (c) 550 (d) None of these.

35. Out of Rs.70,000, I invest Rs.30,000 at 4% and Rs.20,000 at 3%, simple interest. At
what rate of interest must I invest the balance so as to get a return of 5% on the whole
amount per annum ?
(a) 5% (b) 7% (c) 8% (d) 8.5%

36. The difference between compound interest and simple interest on a sum for 3 years at
5% per annum is Rs.122. The sum is –
(a) Rs.15,000 (b) Rs.16,000 (c) Rs.12,000 (d) Rs.18,000

37. Yogesh invested Rs.40,000 in two parts. On the one part he gets interest at the rate of
10% while on the other he gets 6%. If his income on the total investment is 7.5%, the two
parts are in the ratio –
(a) 3 : 5 (b) 2 : 7 (c) 5 : 3 (d) 7 : 2

38. The amount of Rs.600 will earn Rs.300 as simple interest @ 10% per annum in –
(a) 4 years (b) 5 years (c) 6 years (d) 7 years

39. At certain rate of simple interest, Rs.1,000 becomes Rs.2,000 in 5 years and at a
different rate of interest it becomes Rs.3,000 in 12 years. The better rate of interest is –
(a) 24% (b) 15% (c) 20% (d) 16.67%

40. The difference between simple interest and compound interest on a certain sum of
money at the end of 2 years is Rs.117 at 15% per annum, the interest being credited
annually. The principal is –
(a) Rs.5,200 (b) Rs.5,980 (c) Rs.6,760 (d) None of these.
 3
41. At simple interest rate of 4 % per annum, how much time is needed for Rs.432 to yield
4
an interest of Rs.78.66 ?
(a) 2 years 10 months (b) 3 years
(c) 3 years and 10 months (d) 4 years
(e) None of these

42. Rs.1,000 is invested at 5% simple interest. If the interest is added to the principal every
10 years, the amount will become Rs.2,000 after –
2
(a) 15 years (b) 18 years (c) 20 years (d) 16 years
3

43. Vineet deposited Rs.15,600 in a fixed deposit at simple interest at the rate of 10%. After
every second year he converts his interest earnings into deposits. His interest in the
fourth year is –
(a) Rs.1,716 (b) Rs.1,560 (c) Rs.3,432 (d) Rs.1,872
44. The
45. Mohan borrows Rs.50,000 from a bank at 10% per annum. He repays Rs.25,000 at the
end of each year. What amount does he owe to the bank after the second repayment ?
(a) Rs.10,000 (b) Rs.8,000 (c) Rs.12,000 (d) None of these.

46. The simple interest on a sum of money is 4/9 of the principal and the number of years is
equal to the rate of interest. The rate percent is –
1 2
(a) 3 (b) 6 (c) 6 (d) 5
4 3

47. A sum of money at simple interest becomes 1.5 times of itself in 3 years. In how many
years will the same treble itself ?
(a) 10 years (b) 11 years (c) 12 years (d) 13 years

48. Find the least number of years for which an annuity of Rs.1,000 must run in order that its
amount exceed Rs.16,000 at 5% p.a. compounded monthly.
[Given : Log 18 = 1.2553, log 105 = 2.0212]
(a) 12 years (b) 11 years (c) 13 years (d) None.

49. Find the amount of an annuity of Rs.400 per quarter payable for 6 years at 8% p.a.
[Given : (1.02)24 = 1.608-
(a) Rs.11,260 (b) Rs.12,160 (c) Rs.13,200 d) None

50. Find the amount of annuity of Rs.4,000 per annum for 10 years reckoning interest at
10% p.a.
[Given : (1 . 1)10 = 2.594]
(a) Rs.63,760 (b) Rs.63,670 (c) Rs.63,205 (d) None.

51. A person invests Rs.100 at the end of each year at 5% p.a. How much would he get
back at the end of 10 years ?
[Given : (1.05)10 = 1.6289]
(a) Rs.1,275.80 (b) Rs.1257.20 (c) Rs.1,255.60 (d) None.

52. Calculate the present value of an annuity of Rs.5,000 p.a. for 12 years, the interest
being 4% p.a. compounded annually.
[Given : (1.04)  12 = 0.6252]
(a) Rs.46,850 (b) Rs.46,580 (c) Rs.46,875 (d) None.

53. An
54. Find
55. A man
56. Find
57. Find the amount of an annuity of Rs.400 payable at the end of every 3 months for 6
years at 8% p.a. compounded quarterly.
[Given : [(1.02)24 = 1.608]
(a) Rs.12,360 (b) Rs.12,160 (c) Rs.12,500 (d) None.

58. What amount should be set aside at the end of each year to get Rs.1,48,970 at the end
of 8 years at 5% p.a. compounded annually.
[Use log 1.05 = .0212 and Antilog (1.1696) = 14.78]
(a) Rs.15,582.64 (b) 14,560 (c) 15,382.64 (d) None.

59. Find the present worth of an ordinary annuity of Rs.1,200 p.a. for 10 years at 12% p.a.
compounded annually.
[Use (1.12)  10 = 0.3221]
(a) Rs.6,770 (b) Rs.6,779 (c) Rs.6,805 (d) None

60. An annuity of equal payments at the beginning of every six months for 8 years is to be
calculated for Rs.20,000. If the interest rate is 18% p.a. compounded half yearly. How
much is each payment?
[Given : (1.09) 17 = 4.323]
(a) 551.89 (b) 552.89 (c) 556.79 (d) None.

61. What equivalent payments made at the beginning of each month for 8 years will pay for
a house priced at Rs.5 lakh, if money is worth 12% p.a. compounded monthly.
[Given : (1.01)  95 = 0.3904]
(a) 8061.12 (b) 8069.72 (c) 8000.05 (d) None.

62. A company has to repay a debenture stock of Rs.5,00,000 after 12 years. If it creates a
sinking fund for which it sets a side a sum of Rs.32,400 annually to accumulate at 4.5%
per annum compound interest, find the amount in the fund after paying off the debenture
stock.
[Given : (1.045) 12 = 1.6958811]
(a) 1010 (b) 1025 (c) 1035 (d) None.

64. A machine can be purchased for Rs.50,000. Machine will contribute Rs.12,000 per year
for the next five years. Assume borrowing cost is 10% per annum compounded annually.
Determine whether machine should be purchased or not.
(a) Should be purchased (b) should not be purchased
(c) Can’t say about purchase (d) none of the above.

65. A
66. At the beginning of each period consisting of six months, Rs.500 is deposited into saving
account that pays 5% compounded half yearly. Find the balance in the account at the
end of 5 years.
[Given : (1.025)11 = 1.3121]
(a) Rs.5724 (b) Rs.5742 (c) Rs.5472 (d) Rs.5427

67. A company anticipates capital expenditure of Rs.50,000 for new equipment in 10 years.
How much should be deposited annually in a sinking fund earning 10% per year
compounded annually to provide for the purchase ?
[Given : (1.1)10 = 2.5937
(a) Rs.3,871.27 (b) Rs.3,371.27 (c) Rs.3,317.27 (d) Rs.3,137.27
68. A
69. A
70. A machine with useful life for 7 years costs Rs.10,000, while another machine with useful
life of 5 years costs Rs.8,000. The first machine saves labour expenses of Rs.1900
annually and the second one saves labour expenses by Rs.2,200 annually. Determine
the preferred course of action. Assume cost of borrowing as 10% p.a.
[Given : (1.1)7 = 1.9487, ((1.1)5 = 1.610]
(a) first machine (b) second machine (c) any of the two machines (d) None of these

71. At what rate converted semi-annually will the present value of a perpetuity of Rs.450
payable at the end of each 6 months be Rs.20,000.
(a) 5.4% (b) 5% (c) 4.59 (d) 4%

72. Find the present value of a sequence of payment of Rs.80 made at the end of each 6
months and continuing for ever, if money is worth 4% compounded semi annually.
(a) Rs.4,000 (b) Rs.4,500 (c) Rs.5,000 (d) Rs.3,500

73. How much money is needed to endure a series of lectures costing Rs.2,500 at the
beginning of each year indefinitely, if money is worth 3% compounded annually ?
(a) Rs.85,800 (b) Rs.85,833.33 (c) Rs.84,833 (d) Rs.85,830

74. At six month intervals, A deposited Rs.100 in a saving account which credit interest at
10% per annum compounded semi-annually. The first deposit was made when A’s son
was six months old and the last deposit was made when his son was 8 years old. The
money remained in the account and was presented to the son on his 10th birthday. How
much did he receive ?
(a) Rs.2,875.57 (b) Rs.2,800 (c) rs.2,857.75 (d) Rs.2,855.75

ANSWERS TO CHAPTER – 3
(Multiple Choice questions (M.C.Q.)

1. (b) 2. (b) 3. (c) 4. (c) 5. (b) 6. (b) 7. (a) 8. (a)

9. (b) 10. (c) 11. (b) 12. (a) 13. (d) 14. (b) 15. (a) 16. (c)
17. (b) 18. (a) 19. (b) 20. (c) 21. (d) 22. (a) 23. (b) 24. (a)
25. (c) 26. (a) 27. (a) 28. (c) 29. (d) 30. (a) 31. (d) 32. (a)
33. (b) 34. (a) 35. (d) 36. (b) 37. (a) 38. (b) 39. (c) 40. (a)
41. (c) 42. (d) 43. (a) 44. (b) 45. (b) 46. (b) 47. (b) 48. (c)
49. (c) 50. (b) 51. (a) 52. (b) 53. (c) 54. (a) 55. (b) 56. (c)
57. (a) 58. (b) 59. (a) 60. (b) 61. (c) 62. (b) 63. (c) 64. (c)
65. (a) 66. (b) 67. (d) 68. (a) 69. (d) 70. (b) 71. (c) 72. (a)
73. (b) 74. (a) 75. (a)