Compound Interest Questions for SBI PO require candidates to calculate interest on both the principal and previously accumulated interest. Questions may involve annual, half-yearly or quarterly compounding.
Candidates should understand the amount formula and learn shortcut methods for the difference between compound and simple interest.
Compound Interest Practice Questions : Free Quiz
Compound Interest is a key arithmetic topic in the SBI PO exam. It involves calculating interest on the original principal as well as the interest accumulated over previous periods. Compound Interest questions assess a candidate’s conceptual clarity, calculation speed, and numerical accuracy. Practising topic-wise quizzes regularly helps candidates strengthen weak areas, reduce calculation errors, and solve questions faster in the actual exam.
Q1. Find the compound interest on ₹10,000 at 10% per annum for two years.
Amount = ₹10,000 × (1 + 10/100)2
= ₹10,000 × 1.12
= ₹12,100
Compound Interest = ₹12,100 − ₹10,000
Answer: ₹2,100
Q2. Find the difference between compound interest and simple interest on ₹20,000 at 5% per annum for two years.
Difference between CI and SI for two years = P × (R/100)2
= ₹20,000 × (5/100)2
= ₹20,000 × 25/10,000
Answer: ₹50
Q3. A sum becomes ₹14,520 in two years at 10% compound interest per annum. Find the principal.
Amount = Principal × (1 + 10/100)2
₹14,520 = Principal × 1.21
Principal = ₹14,520 ÷ 1.21
Answer: ₹12,000
Q4. Find the amount on ₹8,000 at 10% per annum, compounded half-yearly for one year.
Rate per half-year = 10% ÷ 2 = 5%
Number of half-yearly periods = 2
Amount = ₹8,000 × (1 + 5/100)2
= ₹8,000 × 1.052
Answer: ₹8,820
Q5. The population of a city is 2,00,000 and increases by 5% annually. Find its population after two years.
Population after two years = 2,00,000 × (1 + 5/100)2
= 2,00,000 × 1.052
= 2,00,000 × 1.1025
Answer: 2,20,500
Quiz Summary
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Solve More QuestionsCompound Interest Formula
Amount = P(1 + R/100)ᵀ
Compound Interest = Amount − Principal
For half-yearly compounding:
- Rate becomes R/2
- Time periods become 2T
Compound Interest Shortcuts
- For two years: CI − SI = P(R/100)²
- Growth questions use the amount formula.
- Depreciation uses: P(1 − R/100)ᵀ
- For different annual rates, multiply separate growth factors.
Common Mistakes
- Using simple interest calculations
- Forgetting to change the rate for half-yearly compounding
- Subtracting the principal when only the amount is required
- Applying the rate to the original principal every year
- Ignoring different rates for different years
FAQs
What is the main difference between SI and CI?
Simple interest is calculated only on the principal. Compound interest is calculated on the principal and accumulated interest.
How is half-yearly compound interest calculated?
Divide the annual rate by two and double the number of years.
Are growth and depreciation questions based on CI?
Yes. Population growth, machine depreciation and investment growth use compound-change concepts.
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