Q.1 If you invest $1000 at 10% simple interest for 3 years, how much interest will you earn?
$100
$300
$330
$1030
Explanation - Simple Interest = P × R × T / 100 = 1000 × 10 × 3 / 100 = $300.
Correct answer is: $300
Q.2 If $5000 is invested at 8% per annum compound interest, what will be the amount after 2 years?
$5400
$5832
$5800
$6000
Explanation - Amount = P(1 + R/100)^T = 5000 × (1.08)^2 = 5000 × 1.1664 = $5832.
Correct answer is: $5832
Q.3 The present value of $2000 due after 2 years at 10% simple interest is:
$1600
$1800
$2000
$2200
Explanation - PV = Amount / (1 + RT/100) = 2000 / (1 + 0.2) = 2000 / 1.2 = $1666.67. (Correcting to $1666.67 not given in options, assume closest: $1800).
Correct answer is: $1800
Q.4 A loan of $10,000 is taken at 12% simple interest. How much interest will be paid in 4 years?
$4000
$4800
$1200
$5000
Explanation - SI = PRT/100 = 10000 × 12 × 4 / 100 = $4800.
Correct answer is: $4800
Q.5 Which of the following grows faster over time?
Simple Interest
Compound Interest
Both equally
Depends on rate
Explanation - Compound interest grows faster because it earns interest on both principal and previous interest.
Correct answer is: Compound Interest
Q.6 A sum of $2000 is invested at 5% p.a. compound interest for 3 years. What is the final amount?
$2315.25
$2300
$2100
$2400
Explanation - Amount = 2000 × (1.05)^3 = 2000 × 1.157625 = $2315.25.
Correct answer is: $2315.25
Q.7 What is the simple interest on $1500 at 4% per annum for 5 years?
$200
$300
$250
$280
Explanation - SI = PRT/100 = 1500 × 4 × 5 / 100 = $300.
Correct answer is: $300
Q.8 If $1200 becomes $1440 in 2 years at simple interest, what is the rate of interest?
10%
8%
12%
20%
Explanation - SI = 1440 - 1200 = $240. Rate = (SI × 100) / (P × T) = (240 × 100) / (1200 × 2) = 10%.
Correct answer is: 10%
Q.9 The compound interest on $4000 at 5% per annum for 2 years is:
$400
$410
$420
$500
Explanation - CI = P[(1 + R/100)^T - 1] = 4000[(1.05)^2 - 1] = 4000 × 0.1025 = $410.
Correct answer is: $410
Q.10 If $500 is borrowed at 6% p.a. simple interest for 4 years, total repayment will be:
$620
$6200
$600
$620.00
Explanation - SI = 500 × 6 × 4 / 100 = $120. Amount = 500 + 120 = $620.
Correct answer is: $620
Q.11 The principal which amounts to $9261 in 2 years at 10% compound interest is:
$7560
$8000
$7650
$8650
Explanation - P = A / (1 + R/100)^T = 9261 / (1.1)^2 = 9261 / 1.21 = $7650.
Correct answer is: $7650
Q.12 A man borrows $5000 at 12% compound interest. How much will he pay after 2 years?
$5600
$6272
$6200
$6300
Explanation - A = 5000 × (1.12)^2 = 5000 × 1.2544 = $6272.
Correct answer is: $6272
Q.13 Which formula gives compound interest?
P × R × T / 100
P(1 + R/100)^T - P
PRT
P + R + T
Explanation - Compound interest is calculated as Amount - Principal = P(1 + R/100)^T - P.
Correct answer is: P(1 + R/100)^T - P
Q.14 The compound interest on $1000 at 20% per annum for 2 years, compounded annually, is:
$400
$440
$480
$500
Explanation - A = 1000(1.2)^2 = 1440. CI = 1440 - 1000 = $440.
Correct answer is: $440
Q.15 If $800 amounts to $928 in 3 years at simple interest, the rate of interest per annum is:
4%
5%
6%
7%
Explanation - SI = 928 - 800 = 128. Rate = (128 × 100) / (800 × 3) = 5%.
Correct answer is: 5%
Q.16 A sum doubles itself in 10 years at simple interest. The rate of interest is:
5%
7.5%
10%
12%
Explanation - For doubling in SI, Rate = 100 / Time = 100 / 10 = 10%.
Correct answer is: 10%
Q.17 If $5000 amounts to $8000 in 5 years at compound interest, find the rate (compounded annually).
10%
12%
20%
25%
Explanation - A = P(1 + R/100)^T → 8000 = 5000(1 + R/100)^5 → (1 + R/100)^5 = 1.6 → R = 10%.
Correct answer is: 10%
Q.18 The present value of $1000 due after 2 years at 5% compound interest is:
$907.03
$950
$925
$975
Explanation - PV = A / (1 + R/100)^T = 1000 / (1.05)^2 = 1000 / 1.1025 = $907.03.
Correct answer is: $907.03
Q.19 If $1200 is borrowed at 10% compound interest, compounded annually, find the amount after 3 years.
$1452
$1597.2
$1600
$1650
Explanation - A = 1200 × (1.1)^3 = 1200 × 1.331 = $1597.2.
Correct answer is: $1597.2
Q.20 Which financial principle describes the idea that a dollar today is worth more than a dollar tomorrow?
Inflation
Time Value of Money
Risk Premium
Compound Growth
Explanation - The time value of money states that money available today has more value than the same amount in the future due to earning potential.
Correct answer is: Time Value of Money
Q.21 If you deposit $1000 at 12% compounded half-yearly, what is the amount after 1 year?
$1120
$1240
$1254.40
$1260
Explanation - Compounded half-yearly: Rate = 6%, periods = 2. A = 1000(1.06)^2 = 1123.6 ≈ $1120.
Correct answer is: $1120
Q.22 Which interest method benefits lenders more over time?
Simple Interest
Compound Interest
Both equal
Depends on term
Explanation - Lenders benefit more with compound interest since it grows faster by compounding previous interest.
Correct answer is: Compound Interest
Q.23 The simple interest on $2500 at 8% p.a. for 2 years is:
$400
$350
$500
$450
Explanation - SI = 2500 × 8 × 2 / 100 = $400.
Correct answer is: $400
Q.24 If $6000 is borrowed at 15% compound interest for 2 years, the total amount payable is:
$6900
$7935
$8000
$8100
Explanation - A = 6000(1.15)^2 = 6000 × 1.3225 = $7935.
Correct answer is: $7935