August 17, 2026

20 Simple and Compound Interest Questions with Answers and Solutions

Simple Interest and Compound Interest are important topics in quantitative aptitude and are commonly asked in placement tests, competitive examinations, recruitment assessments, banking examinations, and entrance tests. These questions test your understanding of principal, rate of interest, time, amount, annual compounding, and the difference between simple and compound interest.

This practice set contains 20 original Simple and Compound Interest questions with detailed answers and step-by-step solutions. The questions begin with basic interest calculations and gradually move toward finding principal, rate, time, compound amount, and comparisons between simple and compound interest.

📚 Want to practice more aptitude topics? Visit our [Free Aptitude Tests and MCQs for Placements, Competitive Exams and Interview Preparation] page for topic-wise tests covering Quantitative Aptitude, Logical Reasoning, Verbal Ability, Computer Aptitude, Data Interpretation, and placement preparation.

Try to solve all 20 questions before checking the answers.

Detailed answers and solutions are provided after Question 20.

Simple and Compound Interest Aptitude Test

Question 1

What is the simple interest on ₹5,000 at 8% per annum for 3 years?

A. ₹1,000
B. ₹1,100
C. ₹1,200
D. ₹1,400

Question 2

Find the amount on ₹8,000 invested at 6% simple interest per annum for 2 years.

A. ₹8,860
B. ₹8,960
C. ₹9,000
D. ₹9,200

Question 3

A sum of ₹6,000 earns ₹1,440 as simple interest in 4 years. What is the annual rate of interest?

A. 5%
B. 6%
C. 7%
D. 8%

Question 4

At 10% simple interest per annum, how long will ₹4,500 take to earn ₹1,350 as interest?

A. 2 years
B. 2.5 years
C. 3 years
D. 4 years

Question 5

A sum earns ₹2,100 as simple interest at 7% per annum in 5 years. What is the principal?

A. ₹5,000
B. ₹5,500
C. ₹6,000
D. ₹6,500

Question 6

What is the compound amount on ₹10,000 at 10% per annum for 2 years, compounded annually?

A. ₹11,800
B. ₹12,000
C. ₹12,100
D. ₹12,200

Question 7

What is the compound interest on ₹8,000 at 5% per annum for 2 years, compounded annually?

A. ₹800
B. ₹820
C. ₹840
D. ₹860

Question 8

Juhi invests ₹12,000 at 10% per annum compounded annually. What will be the amount after 3 years?

A. ₹15,720
B. ₹15,840
C. ₹15,972
D. ₹16,000

Question 9

What is the difference between compound interest and simple interest on ₹10,000 at 10% per annum for 2 years?

A. ₹80
B. ₹100
C. ₹120
D. ₹200

Question 10

A sum becomes ₹14,520 in 2 years at 10% compound interest per annum. What was the original principal?

A. ₹11,000
B. ₹11,500
C. ₹12,000
D. ₹12,500

Question 11

A sum doubles itself in 10 years at simple interest. What is the annual rate of interest?

A. 8%
B. 10%
C. 12%
D. 15%

Question 12

At what annual simple interest rate will ₹7,500 amount to ₹9,300 in 4 years?

A. 5%
B. 6%
C. 7%
D. 8%

Question 13

What is the compound interest on ₹20,000 at 8% per annum for 2 years, compounded annually?

A. ₹3,200
B. ₹3,280
C. ₹3,328
D. ₹3,400

Question 14

Cherry invests ₹15,000 at 12% simple interest per annum for 2 years. Charlie invests the same amount at 10% compound interest per annum for 2 years. Who earns more interest and by how much?

A. Cherry by ₹450
B. Cherry by ₹600
C. Charlie by ₹450
D. Charlie by ₹600

Question 15

A principal of ₹25,000 earns compound interest at 20% per annum for 2 years. What is the final amount?

A. ₹35,000
B. ₹35,500
C. ₹36,000
D. ₹36,500

Question 16

The compound amount on a sum after 2 years at 10% per annum is ₹24,200. What is the principal?

A. ₹18,000
B. ₹20,000
C. ₹22,000
D. ₹22,500

Question 17

A sum amounts to ₹13,310 after 3 years at 10% compound interest per annum. What was the principal?

A. ₹9,000
B. ₹10,000
C. ₹10,500
D. ₹11,000

Question 18

What is the difference between compound interest and simple interest on ₹20,000 for 2 years at 5% per annum?

A. ₹40
B. ₹50
C. ₹75
D. ₹100

Question 19

A sum earns ₹3,600 simple interest in 3 years at 8% per annum. If the same principal is invested for 2 years at 10% compound interest per annum, what compound interest will it earn?

A. ₹2,800
B. ₹3,000
C. ₹3,150
D. ₹3,200

Question 20

Nyra invests ₹20,000 for 2 years. One scheme offers 12% simple interest per annum, while another offers 12% compound interest per annum compounded annually. How much more will she earn under the compound-interest scheme?

A. ₹240
B. ₹288
C. ₹320
D. ₹360

Answers and Detailed Solutions

Answer 1: C — ₹1,200

Simple Interest is calculated using:

[
SI=\frac{P\times R\times T}{100}
]

Here:

[
P=5000,\quad R=8,\quad T=3
]

Therefore:

[
SI=\frac{5000\times8\times3}{100}
]

[
=1200
]

Therefore:

Correct Answer: ₹1,200

Answer 2: B — ₹8,960

Principal:

[
P=8000
]

Rate:

[
R=6%
]

Time:

[
T=2
]

Simple Interest:

[
SI=\frac{8000\times6\times2}{100}
]

[
=960
]

Amount:

[
A=P+SI
]

[
=8000+960
]

[
=8960
]

Therefore:

Correct Answer: ₹8,960

Answer 3: B — 6%

Given:

[
SI=1440
]

[
P=6000
]

[
T=4
]

Using:

[
SI=\frac{PRT}{100}
]

Therefore:

[
1440=\frac{6000\times R\times4}{100}
]

So:

[
R=\frac{1440\times100}{6000\times4}
]

[
=6%
]

Therefore:

Correct Answer: 6%

Answer 4: C — 3 years

Given:

[
P=4500
]

[
R=10%
]

[
SI=1350
]

Using:

[
T=\frac{SI\times100}{P\times R}
]

Therefore:

[
T=
\frac{1350\times100}{4500\times10}
]

[
=3
]

Therefore:

Correct Answer: 3 years

Answer 5: C — ₹6,000

Given:

[
SI=2100
]

[
R=7%
]

[
T=5
]

Using:

[
P=\frac{SI\times100}{R\times T}
]

Therefore:

[
P=
\frac{2100\times100}{7\times5}
]

[
=\frac{210000}{35}
]

[
=6000
]

Therefore:

Correct Answer: ₹6,000

Answer 6: C — ₹12,100

For compound interest:

[
A=P\left(1+\frac{R}{100}\right)^T
]

Here:

[
P=10000
]

[
R=10
]

[
T=2
]

Therefore:

[
A=
10000(1.10)^2
]

[
=10000\times1.21
]

[
=12100
]

Therefore:

Correct Answer: ₹12,100

Answer 7: B — ₹820

Principal:

[
8000
]

Rate:

[
5%
]

After the first year:

[
8000\times1.05=8400
]

After the second year:

[
8400\times1.05=8820
]

Compound Interest:

[
8820-8000=820
]

Therefore:

Correct Answer: ₹820

Answer 8: C — ₹15,972

Principal:

[
12000
]

Rate:

[
10%
]

Time:

3 years.

Amount:

[
A=12000(1.10)^3
]

[
=12000\times1.331
]

[
=15972
]

Therefore:

Correct Answer: ₹15,972

Answer 9: B — ₹100

Simple Interest:

[
SI=\frac{10000\times10\times2}{100}
]

[
=2000
]

Compound Amount:

[
10000(1.10)^2
]

[
=12100
]

Compound Interest:

[
12100-10000
]

[
=2100
]

Difference:

[
2100-2000
]

[
=100
]

Therefore:

Correct Answer: ₹100

Answer 10: C — ₹12,000

Given compound amount:

[
A=14520
]

Rate:

10%

Time:

2 years.

Using:

[
A=P(1.10)^2
]

Therefore:

[
14520=1.21P
]

[
P=\frac{14520}{1.21}
]

[
=12000
]

Therefore:

Correct Answer: ₹12,000

Answer 11: B — 10%

If a sum doubles, the interest earned equals the original principal.

Assume principal:

[
P
]

After 10 years, amount:

[
2P
]

Therefore:

[
SI=P
]

Using:

[
SI=\frac{PRT}{100}
]

[
P=\frac{P\times R\times10}{100}
]

Cancel (P):

[
1=\frac{10R}{100}
]

Therefore:

[
R=10%
]

Correct Answer: 10%

Answer 12: B — 6%

Principal:

[
7500
]

Amount:

[
9300
]

Therefore Simple Interest:

[
9300-7500=1800
]

Time:

4 years.

Using:

[
R=\frac{SI\times100}{P\times T}
]

[
R=
\frac{1800\times100}{7500\times4}
]

[
=6%
]

Therefore:

Correct Answer: 6%

Answer 13: C — ₹3,328

Principal:

[
20000
]

Rate:

Time:

2 years.

Amount:

[
A=20000(1.08)^2
]

[
=20000\times1.1664
]

[
=23328
]

Compound Interest:

[
23328-20000
]

[
=3328
]

Therefore:

Correct Answer: ₹3,328

Answer 14: A — Cherry by ₹450

Cherry’s Simple Interest

Principal:

₹15,000

Rate:

12%

Time:

2 years.

[
SI=
\frac{15000\times12\times2}{100}
]

[
=3600
]

Charlie’s Compound Interest

[
A=15000(1.10)^2
]

[
=15000\times1.21
]

[
=18150
]

Compound Interest:

[
18150-15000=3150
]

Difference:

[
3600-3150
]

[
=450
]

Therefore, Cherry earns:

₹450 more

Correct Answer:

Cherry by ₹450

Answer 15: C — ₹36,000

Principal:

[
25000
]

Rate:

20%

Time:

2 years.

[
A=25000(1.20)^2
]

[
=25000\times1.44
]

[
=36000
]

Therefore:

Correct Answer: ₹36,000

Answer 16: B — ₹20,000

Amount:

[
24200
]

Rate:

10%

Time:

2 years.

[
24200=P(1.10)^2
]

[
24200=1.21P
]

Therefore:

[
P=\frac{24200}{1.21}
]

[
=20000
]

Therefore:

Correct Answer: ₹20,000

Answer 17: B — ₹10,000

Amount:

[
13310
]

Rate:

10%

Time:

3 years.

Using:

[
A=P(1.10)^3
]

Since:

[
(1.10)^3=1.331
]

Therefore:

[
13310=1.331P
]

[
P=\frac{13310}{1.331}
]

[
=10000
]

Therefore:

Correct Answer: ₹10,000

Answer 18: B — ₹50

For two years, the difference between compound interest and simple interest can also be calculated as:

[
P\left(\frac{R}{100}\right)^2
]

Given:

[
P=20000
]

[
R=5
]

Therefore:

[
Difference

20000\left(\frac{5}{100}\right)^2
]

[
=20000\times0.0025
]

[
=50
]

Therefore:

Correct Answer: ₹50

We can also verify this directly.

Simple Interest:

[
\frac{20000\times5\times2}{100}

2000
]

Compound Amount:

[
20000(1.05)^2

22050
]

Compound Interest:

[
22050-20000=2050
]

Difference:

[
2050-2000=50
]

Answer 19: C — ₹3,150

First find the principal.

Given:

[
SI=3600
]

[
T=3
]

[
R=8
]

Using:

[
P=\frac{SI\times100}{R\times T}
]

[
P=
\frac{3600\times100}{8\times3}
]

[
=\frac{360000}{24}
]

[
=15000
]

Now invest ₹15,000 for 2 years at 10% compound interest.

Amount:

[
A=15000(1.10)^2
]

[
=18150
]

Compound Interest:

[
18150-15000
]

[
=3150
]

Therefore:

Correct Answer: ₹3,150

Answer 20: B — ₹288

Principal:

[
₹20000
]

Rate:

12%

Time:

2 years.

Simple Interest

[
SI=
\frac{20000\times12\times2}{100}
]

[
=4800
]

Compound Interest

[
A=
20000(1.12)^2
]

[
=20000\times1.2544
]

[
=25088
]

Compound Interest:

[
25088-20000
]

[
=5088
]

Difference:

[
5088-4800
]

[
=288
]

Therefore:

Correct Answer: ₹288

Quick Answer Key

Question	Answer	Question	Answer
1	C	11	B
2	B	12	B
3	B	13	C
4	C	14	A
5	C	15	C
6	C	16	B
7	B	17	B
8	C	18	B
9	B	19	C
10	C	20	B

How Did You Score?

Correct Answers	Performance
18–20	Excellent — You have a strong understanding of Simple and Compound Interest.
15–17	Very Good — Your fundamentals are strong; practice reverse principal and comparison questions.
11–14	Good — Review compound amount, rate, and difference calculations.
6–10	Needs Practice — Revise the basic SI and CI formulas and attempt the test again.
0–5	Beginner — Start with principal, rate, time, simple interest, and amount before moving to compound interest.

Important Simple Interest Formulas

Simple Interest

[
SI=
\frac{P\times R\times T}{100}
]

where:

(P) = Principal
(R) = Rate per annum
(T) = Time in years

Amount Under Simple Interest

[
A=P+SI
]

Finding Principal

[
P=
\frac{SI\times100}{R\times T}
]

Finding Rate

[
R=
\frac{SI\times100}{P\times T}
]

Finding Time

[
T=
\frac{SI\times100}{P\times R}
]

Important Compound Interest Formulas

For annual compounding:

[
A=
P\left(1+\frac{R}{100}\right)^T
]

Then:

[
CI=A-P
]

where:

(P) = Principal
(R) = Annual rate of interest
(T) = Number of years
(A) = Amount
(CI) = Compound Interest

Understanding Compound Interest

Suppose ₹10,000 is invested at 10% compound interest.

End of Year 1

Interest:

[
10%\text{ of }10000=1000
]

Amount:

[
11000
]

End of Year 2

Interest is now calculated on ₹11,000:

[
10%\text{ of }11000=1100
]

Final amount:

[
12100
]

Total compound interest:

[
12100-10000=2100
]

This extra ₹100 compared with simple interest arises because interest is earned on the previous interest.

Simple Interest vs Compound Interest

Simple Interest	Compound Interest
Interest is calculated on original principal	Interest can be calculated on accumulated amount
Interest per year remains constant when rate is fixed	Interest amount can increase over time
Easier to calculate	Uses compounding
Growth is linear	Growth is multiplicative

For short periods and low rates, the difference may be small.

Over longer periods, compounding can create a much larger difference.

Difference Between SI and CI for Two Years

For two years at the same annual rate:

[
CI-SI

P\left(\frac{R}{100}\right)^2
]

For example:

Principal:

₹10,000

Rate:

10%

Difference:

[
10000\left(\frac{10}{100}\right)^2
]

[
=100
]

This shortcut is useful in aptitude tests.

A Common Interest Mistake

Do not calculate compound interest as:

[
\frac{P\times R\times T}{100}
]

That formula calculates Simple Interest.

For compound interest, the amount changes as interest is added to the principal.

For annual compounding:

[
A=P\left(1+\frac{R}{100}\right)^T
]

Then subtract the original principal:

[
CI=A-P
]

Another Common Mistake: Confusing Interest and Amount

Suppose:

Principal = ₹10,000

Compound amount after two years = ₹12,100.

The compound interest is not ₹12,100.

It is:

[
12100-10000
]

[
=2100
]

Therefore:

Amount = Principal + Interest

Topics Covered in This Test

This Simple and Compound Interest test covered:

Simple Interest
Principal
Rate of interest
Time
Amount
Compound Interest
Annual compounding
Finding principal from amount
Finding rate
Finding time
Difference between SI and CI
Comparing investment schemes
Doubling under simple interest
Multi-step interest calculations

Understanding these concepts is also useful in commercial arithmetic, banking aptitude, investments, loans, percentages, and financial mathematics.

Frequently Asked Questions

What is Simple Interest?

Simple Interest is interest calculated only on the original principal for the entire investment or loan period.

The formula is:

[
SI=\frac{PRT}{100}
]

What is Compound Interest?

Compound Interest is calculated on the accumulated amount, so previous interest can also earn interest in subsequent periods.

What is Principal?

Principal is the original amount invested or borrowed.

What is Amount?

Amount is the total value after adding interest to the principal.

For simple interest:

[
A=P+SI
]

For compound interest:

[
A=P+CI
]

What is the main difference between Simple and Compound Interest?

Under Simple Interest, interest is calculated on the original principal.

Under Compound Interest, interest may be calculated on the accumulated amount containing both principal and previous interest.

Is Compound Interest always greater than Simple Interest?

For the same positive principal, positive rate, and a period longer than one compounding interval, compound interest is generally greater than simple interest when both are compared under equivalent annual conditions.

For one year with annual compounding, they are equal.

How do I calculate compound amount for two years?

Use:

[
A=
P\left(1+\frac{R}{100}\right)^2
]

Are Simple and Compound Interest questions important for placement tests?

Yes. They are common quantitative aptitude topics and also strengthen understanding of percentages and commercial arithmetic.

Which topic should I understand before learning interest?

A good understanding of Percentages makes both Simple Interest and Compound Interest much easier.

Conclusion

Simple and Compound Interest questions become easier when you first identify four quantities:

Principal → Rate → Time → Interest/Amount

For Simple Interest, the original principal remains the basis of the interest calculation.

For Compound Interest, the accumulated amount can become the basis for the next period’s interest.

The most important formulas are:

[
SI=\frac{PRT}{100}
]

and:

[
A=P\left(1+\frac{R}{100}\right)^T
]

Once these relationships are clear, questions involving missing principal, rate, time, and comparisons between investment schemes can be solved systematically.

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20 Simple and Compound Interest Questions with Answers and Solutions

Simple and Compound Interest Aptitude Test

Question 1

Question 2

Question 3

Question 4

Question 5

Question 6

Question 7

Question 8

Question 9

Question 10

Question 11

Question 12

Question 13

Question 14

Question 15

Question 16

Question 17

Question 18

Question 19

Question 20

Answers and Detailed Solutions

Answer 1: C — ₹1,200

Answer 2: B — ₹8,960

Answer 3: B — 6%

Answer 4: C — 3 years

Answer 5: C — ₹6,000

Answer 6: C — ₹12,100

Answer 7: B — ₹820

Answer 8: C — ₹15,972

Answer 9: B — ₹100

Answer 10: C — ₹12,000

Answer 11: B — 10%

Answer 12: B — 6%

Answer 13: C — ₹3,328

Answer 14: A — Cherry by ₹450

Cherry’s Simple Interest

Charlie’s Compound Interest

Answer 15: C — ₹36,000

Answer 16: B — ₹20,000

Answer 17: B — ₹10,000

Answer 18: B — ₹50

[Difference

[\frac{20000\times5\times2}{100}

[20000(1.05)^2

Answer 19: C — ₹3,150

Answer 20: B — ₹288

Simple Interest

Compound Interest

Quick Answer Key

How Did You Score?

Important Simple Interest Formulas

Simple Interest

Amount Under Simple Interest

Finding Principal

Finding Rate

Finding Time

Important Compound Interest Formulas

Understanding Compound Interest

End of Year 1

End of Year 2

Simple Interest vs Compound Interest

Difference Between SI and CI for Two Years

[CI-SI

A Common Interest Mistake

Another Common Mistake: Confusing Interest and Amount

Topics Covered in This Test

Frequently Asked Questions

What is Simple Interest?

What is Compound Interest?

What is Principal?

What is Amount?

What is the main difference between Simple and Compound Interest?

Is Compound Interest always greater than Simple Interest?

How do I calculate compound amount for two years?

Are Simple and Compound Interest questions important for placement tests?

Which topic should I understand before learning interest?

Conclusion

[
Difference

[
\frac{20000\times5\times2}{100}

[
20000(1.05)^2

[
CI-SI