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Mathematical Ability Test

[Topic: Compound Interest] MAA7

Test Test Code Topic No. of Questions Maximum Marks Competitive score Time allowed

MATHEMATICS MAA7 COMPOUND INTEREST 20 20 16 18 minutes Page | 1

Answers with explanations have been provided for self-evaluation. Do send us your score after completing the test.

1. A borrower returns Rs 14,641 after 3 years from the date of borrowing. If the rate of interest is 10% per annum and interest compounded annually, what is the amount borrowed? a. Rs 10000 b. Rs 11000 c. Rs 12500 d. Rs 11200 2. What is the compound interest on Rs 20,000 for 3 years if rate of interest is 5% for 1st year, 10% for 2nd year and 20% for 3rd year. a. Rs 7750 b. Rs 7720 c. Rs 7790 d. Rs 7620 3. Find the CI for Rs 16,000 at 5% for 2 years. a. Rs 2512 b. Rs 2222 c. Rs 2533 d. Rs 2522
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Mathematical Ability Test


[Topic: Compound Interest] MAA7

4. If CI for a certain sum for 2 years at 10% p.a is Rs 693, find out the sum lent out. a. Rs 3300 b. Rs 3500 c. Rs 3100 d. Rs 3870 5. If CI for a certain sum at 10% per annum for the 2nd year is Rs 2860, what is the principal? a. Rs 26,000 b. Rs 28,000 c. Rs 25,000 d. Rs 24,000 6. A certain sum of money at a certain rate of CI doubles in 6 years. In how many years, will it become 16 times? a. 26 years b. 24 years c. 27 years d. 21 years 7. A certain sum on compound interest becomes Rs 4000 in 3 years and Rs 8000 in 6 years. What will be the amount after 9 years? a. Rs 16000 b. Rs 18000 c. Rs 14000 d. Rs 16500 Page | 2

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Mathematical Ability Test


[Topic: Compound Interest] MAA7

8. If a CI on a certain sum of money at 10% per annum is Rs 2,000 what is the CI for the succeeding year when interest is computed annually. a. Rs 2300 b. Rs 2200 c. Rs 2100 d. Rs 2000 9. An amount is borrowed at 15% CI for 2 years. What is the percentage of increase in the amount at the end of 2 years? a. 32.25% b. 34.35 c. 31.25% d. 33.33% 10. The intake of skilled laborers in a small industry increase at 10% per annum. If the present strength is 1000, after how many years, the strength would increase to 1331? a. 3 years b. 3.5 years c. 4 years d. 6 years Page | 3

11. If Rs 8000 increases to Rs 9261 in 3 years at CI, what is the rate of interest per annum? a. 5% b. 6% c. 4.5% d. 4%

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Mathematical Ability Test


[Topic: Compound Interest] MAA7

12. At what rate percentage of CI, a sum would become 16 times of itself in 4 years? a. 100% b. 122% c. 121% d. 110% 13. A machine costs Rs 10,000 now, and its annual depreciation is 25%. What would be its value after 2 years? a. Rs 6625 b. Rs 5625 c. Rs 6750 d. Rs 6650 14. A scooter depreciates at 25% per annum. If the present value is Rs 16,200, find out the cost price 2 years ago. a. Rs 28,800 b. Rs 26,700 c. Rs 28,600 d. Rs 25,000 15. CI on a certain sum for 2 consecutive years is Rs 150 and Rs 155 respectively. What is the rate of interest? a. 32/3 % b. 31/3 % c. 3% d. none of the above Page | 4

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Mathematical Ability Test


[Topic: Compound Interest] MAA7

16. Raja borrows a certain sum of money and returns in 2 equal annual instalments. If he pays back Rs 441annually at the rate of interest of 5% per annum, what is the sum borrowed? a. Rs 940 b. Rs 930 c. Rs 820 d. Rs 850 17. The difference between CI and SI on Rs 2,500 for 2 years at 4% per annum is? a. Rs 4 b. Rs 6 c. Rs 11 d. None of the above 18. What is the effective annual rate of interest corresponding to a rate of 6% per annum payable half yearly? a. 6.19% b. 5.09% c. 6.29% d. 6.09% 19. If the difference between CI and SI on a certain sum of money for 2 years at 4% per annum is Rs 40, find the sum. a. Rs 30,000 b. Rs 25,000 c. Rs 28,000 d. None of the above 20. A sum of money invested at CI amounts to Rs 2,400 in 3 years and Rs 2,640 in 4 years. What is the rate of interest? a. 10% b. 12% c. 9% d. none of the above
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ANSWERS ON NEXT PAGE

Mathematical Ability Test


[Topic: Compound Interest] MAA7

S.No Answer 1 b Principal =

Explanation/Hints A -------------( 1 + R/100)


T

Difficulty level = 14641 --------(11/10)3 = 11000 MODERATE Page | 6

= 14641 x 10 x 10 x 10 11 x 11 x 11 2 b Amount after 3 years =PX 100+R1 100 X 100+R2 100

DIFFICULT X 100+R3 100

= 20000 X 21/20 X 11/10 X 6/5 = 27720. Hence CI = 27720 20000 = Rs 7720, 3 d 1 + r/100 = 1+ 5/100 = 21/20 Amount = 16000 X 21/20 X 21/20 X 21/20 = 18522 CI = 18522 16000 = Rs 2522 4 a Let the principal be Rs 100 Amount = 100 X (11/10)2 = 121. Hence CI = 21. If principal is 100, CI is 21. If principal is 693, CI = 693 X 100/21 = Rs 3300 5 a Let principal be Rs 100. Amount after 1st year = Rs 110. Amount after 2nd year = 100 X (11/10)2 = 121. Hence CI for 2nd year = 11. If CI for 2nd year is Rs 11, principal =100. If CI for 2nd year is Rs 2860, principal = 2860 X 100/11 = Rs 26,000, option a MODERATE SIMPLE SIMPLE

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Mathematical Ability Test


[Topic: Compound Interest] MAA7

S.No Answer 6 b

Explanation/Hints The amount becomes 21 times in 6 years=> It will become 24 times in 4 X 6 = 24 years, option b Rule: If a sum becomes x times in n years, then it will become x times in an years.

Difficulty level DIFFICULT Page | 7

In 3 years the amount doubles to Rs 8000. In the next 3 years, MODERATE the amount doubles to 8000 X 2 = Rs 16,000. Hence, after 9 years the amount will be Rs 16,000 optiona

CI for succeeding year = 100 +r% times of CI of previous year. = 2000 (100 + 10%) = 2000 X 11/10 = Rs 2,200

MODERATE

Let the amount be 100. Amount after 1st year = 115. Amount after 2nd year = 115 + 15% = 132.25 => hence percentage increase = 32.25 Amount/Principal = (1 + R/100)time 1331 = (11/10) 1000 Hence time = 3 years (1+ r/100)T = Amount/Principal = (1+ r/100)3 = 9261/8000 = (21/20)3 Hence, 1+ r/100 = 21/20 => r = 1/20 = 5%, option a
3

MODERATE

10

SIMPLE

11

MODERATE

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Mathematical Ability Test


[Topic: Compound Interest] MAA7

S.No Answer 12 a

Explanation/Hints Let P be Re1 => amount = 16. Hence, (1+r/100) = 2 => 1+r/100 = 2 r = 100%
4 4

Difficulty level MODERATE Page | 8

13

Value after 2 years = 10000 X (1-25/100) = 10000 X X = Rs 5625, option b Rule: If present value is P, annual depreciation is r%, value after n years = P X (1-r/100)n and n years before = P / (1-r/100) Value two years ago = 16200/(1-25/100)2 = Rs 28,800 Difference in CI for 2 consecutive years = Rs 5, which is equal to SI on Rs 150 for 1 year. Hence rate of interest = 100/150 X 5 = 31/3 %, option b
n
2

DIFFICULT

14 15

a b

DIFFICULT SIMPLE

16

1 + r = 1 + 5/100 = 21/20. Principal of 1 installment = 20/21 X 441= 420 Principal of 2nd installment = 441 X 20/21 X 20/21 = 400. Hence sum borrowed = Rs 820 CI SI = P X (R/100)2 = 2500 X 4/100 X 4/100 = Rs 4
st

MODERATE

17

MODERATE

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Mathematical Ability Test


[Topic: Compound Interest] MAA7

S.No Answer 18 d Let P be 100.

Explanation/Hints

Difficulty level
2

Amount when compounded half yearly = 100 X (1+3/100) = 106.09, hence effective rate of interest = 6.09% CI-SI = P (R/100)2 => 40 = P X 1/25 X 1/25 => P = 25,000

SIMPLE Page | 9

19

MODERATE

20

SI for 1 year = 2640 2400 = 240. P= 2400. Rate = 240 X 100/2400 X 1 = 10%

SIMPLE

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