Solved Questions of Simple Interest
1. Serena deposited $ 50000 in a bank which charged an interest of 5 percent p.a. Calculate the interest and the amount she earned after 2 years.
a) $5000, $50000
b) $5000, $55000
c) $10000, $50000
d) $10000, $55000
Answer: b) $5000, $55000
Explanation: Given: Principal (P) = $50000
Time (T) = 2 years,
Rate (R) = 5% p.a.
Substitute the values in the simple interest formula;
S.I. = (P × R × T)/100
= (50000 x 5 x 2)/100
= $5000
She earned interest of $5000.
Amount (A) = Principal (P) + Interest (I)
50000 + 5000 = 55000
Serena got $55000.
2. Find simple interest on $2000 at 5% per annum for 3 years.
a) $300
b) $200
c) $100
d) $50
Answer: a) $300
Explanation: Principal = $2000
Rate = 5% p.a.
T = 3 years
S.I. = (P × R × T)/100
= (2000 × 5 × 3)/100
= $300
3. Alfred took a loan of $20000 from a bank on 4 February 2009 at the rate of 8% p.a. and paid back the same on 6th July 2009. Find the total amount paid by Alfred.
a) $22879.23
b) $21908.20
c) $21098.18
d) $20666.30
Answer: d) $20666.30
Explanation: P = $20000
R = 8% p.a.
T = 152/365
Time = February + March + April + May + Jun + July
= 24 days + 31 days + 30 days + 31 days + 30 days + 6 days
= 152 days
Therefore, S.I. = (P × R × T)/100
= (20000 × 8 × 152)/(100 × 365)
= $(40 × 8 × 152)/73
= $666.30
Therefore, the amount paid = $(20,000 + 666.30) = $20666.30
4. What is the interest rate on a $2,000 loan that earns $200 in simple interest over 2 years?
a) 5%
b) 10%
c) 15%
d) 20%
Answer: a) 5%
Explanation: Simple Interest = P x R x T
$200 = $2,000 x Interest Rate x 2
Interest Rate = $200 / ($2,000 x 2)
= 0.05 or 5%
5. A person borrows $3000 from a bank at a 7% annual interest rate. How much interest will he has to pay in 2 years?
a) $420
b) $340
c) $210
d) $100
Answer: a) $420
Explanation: Given P = $3000
R = 7% (or 0.07)
T = 2 years
Interest = P x R x T
Interest = $3000 x 0.07 x 2
= $420
Practice Questions of Simple Interest
1. At what percent will $1500 amount to $2400 in 4 years?
a) 12%
b) 13%
c) 14%
d) 15%
Answer: d) 15%
2. What is the simple interest earned on a $1,000 loan at a 5% interest rate for 2 years?
a) $50
b) $100
c) $150
d) $200
Answer: b) $100
3. What is the simple interest to be paid on a $5,000 loan at a 10% interest rate for 3 years?
a) $1000
b) $1200
c) $1500
d) $2500
Answer: c) $1500
4. Stanley borrowed $8,000 from a bank at a 15% interest rate for 4 years. How much money he has to pay in total?
a) $12800
b) $10000
c) $8000
d) $4800
Answer: a) $12800
5. What is the simple interest earned on a $5,500 loan at a 7% interest rate for 1.5 years?
a) $577.5
b) $432.3
c) $389.2
d) $200.1
Answer: a) $577.5
6. A person deposited $2000 in a bank account and earns a 5% annual interest rate. How much interest will he earn in one year?
a) $400
b) $300
c) $200
d) $100
Answer: d) $100
7. A person invests $5000 in a stock that earns a 12% annual interest rate. How much interest will he earn in 3 years?
a) $1000
b) $1200
c) $1400
d) $1800
Answer: d) $1800
8. A person takes out a loan of $10000 at a 15% annual interest rate. How much interest he has to pay in 4 years?
a) $3000
b) $4000
c) $6000
d) $8000
Answer: c) $6000
9. If you invest $5000 at a 6% interest rate for 3 years, how much money will you have at the end of the 3 years?
a) $5000
b) $5200
c) $5400
d) $5900
Answer: d) $5900
10. In how much time will a sum of money triple itself at 15 % p.a.?
a) 12.5 years
b) 13.3 years
c) 15.2 years
d) 16 years
Answer: b) 13.3 years
