1 TIME VALUE OF MONEY

SIMPLE INTERST

- Interest is paid only once at the end of time

I = (Pnr ) /100

A=P+I

nr
A = P ⌊1 + 100
⌋

Here, P =principle = initial money deposited

R = rate of interest
N = number of year
= number of month /12
= number of days / 365

COMPOUND INTEREST
- interest is paid continuously

A = P (1 + i)n

I=A–P

Here,
N = number of conversion period = no of years * (1or or 4 or 12)
I =( rate of interest) / ( 1 or 2 or 4 or 12)
Note : When n =1 & interest is paid annually then Simple interest = compound interest

APPLICATIONS OF COMPOUND INTEREST

a. In the problems of population :
A = P (1 + i)n
here, A = final population
p = initial population

Maths Magician Raj Awate

 i = rate of growth of population = birth rate – death rate

b. In the problems of depreciation :

SV =C P (1 - i)n

SV = scrap value
CP = cost price
I = rate of depreciation
n = effective life of machine

c. Effective rate of interest :

ie = (1 + i)n – 1
Where, ie= effective interest rate
i = actual / nominal interest rate
n = 1 year * 1/ 2 / 4/ 12

annuity
• Future value
a. By annuity regular : (payment at end)

F.V=

A (1 +i)n − 1  where, A = annuity
i

b. By annuity due : (payment at start)

F.V=

A (1 +i)n − 1 
x (1 + i)
i

- If installments are paid initially & total amount is to be received after certain
years then use future value formula.
- Future value is also used for sinking fund problems

PRESENT VALUE
• Present value :

a. By annuity regular :

V=

A (1 +i)n − 1 = A . P(n, i)
i (1 + i) n

Maths Magician Raj Awate

 b. By annuity due

V=A
(1 +i) n -1
-1 
i (1 + i) n -1

- If total amount is received initially & installments are paid later on then use
present value.
- Present value is applicable in the problems of house property, loan or borrow.
- Amount of loan, amount of money borrowed& amount of house property is
taken as present value.

Maths Magician Raj Awate

 Simple Interest
1. What sum of money will produce? 42,800 as an interest in 3 years and 3
months at 2.5% p.a simple interest? (Dec 2021)
(a) ₹ 3,78,000 (b) ₹ 5,26,769 (c) ₹4, 22,000 (d) ₹ 2,24,000

2. A certain sum amounted to ₹575 at 5% in a time in which ₹ 750 amounted

to ₹ 840 at 4%. If the rate of interest is simple, find the sum- (Jan 2021)
(a) 525
(b) 550
(c) 515
(d) 500

3. A man invested one-third of his capital at 7% one fourth at 8% and the

remainder at 10%. If the annual income is ₹ 561. The capital is –
(Jan 2021)
(a) ₹ 4,400
(b) ₹ 5,500
(c) ₹ 6,600
(d) ₹ 7 5,800

4. Certain sum amounts to ₹ 15748 in 3 years at simple interest at r% p.a. The

same sum amounts to ₹ 16,510 at (r+2)% p.a. simple interest in the same
time. What is the value of r? (July 2021)
(a) 10%
(b) 8%
(c) 12%
(d) 6%

5. Two equal amounts of money are deposited in two banks each at 15% p.a.
S.I. Fix 3.5 year in the bank and fix 5 years respectively. The difference
between the interest amount from the bank is ₹ 144. Find the sum
(Jan 2021)
(a) ₹ 620 (b) ₹ 640 (c) ₹ 820 (d) ₹ 840

6. A sum of money in simple interest doubles itself in 7 years. How many years
will take to triple itself? (Dec 2021)
(a) End of 12 years

Maths Magician Raj Awate

 (b) End of 14 years
(c) End of 18 years
(d) End of 16 years

7. Simple interest on a sum of money is amount to ₹ 59,000 in 3 years and ₹

62,000 in 4 years at same rate of interest. What are the principal amount
and rate of interest? (Dec 2021)
(a) ₹ 50,000, 6%
(b) ₹ 45,000, 5.5%
(c) ₹ 55,000, 5%
(d) ₹ 52,000, 7%

8. An investor is saving to pay off an obligation of ₹ 15,250 which will be due

in seven years, if the investor is earning 7.5% simple interest rate per
annum, he must deposit ₹ ……………………………. to meet the obligation.
( June 2022)
(a) 8,000
(b) 9,000
(c) 10,000
(d) 11,000

9. The annual rate of simple interest is 12.5%. In how many years does the
principal double? (June 2022)
(a) 11 years
(b) 9 years
(c) 8 years
(d) 7 years

10.A farmer borrowed ₹ 3600 at the rate of 15% simple interest per Annum. At
the end of 4 years. He cleared this account by paying ₹ 4000 and a cow. The
cost of the cow is: (Dec 2022)
(a) ₹ 1000
(b) ₹ 1200
(c) ₹ 1550
(d) ₹ 1760

Maths Magician Raj Awate

 Compound Interest
11.On what sum will the compound interest at 5% p.a. for 2 years
compounded annually be ₹ 3,280 (Dec 2020)
(a) ₹ 16,000
(b) ₹ 32,000
(c) ₹ 48,000
(d) ₹ 64,000

12.An amount P becomes ₹ 5,100.5 and ₹ 5,203 after second and fourth years
respectively, at r% of interest per annum compounded annually. Thus,
values of P and r are (Dec 2020)
(a) ₹ 5,000 and 1
(b) ₹ 4,000 and 1.5
(c) ₹ 6,000 and 2
(d) ₹ 5,500 and 3

13.A certain sum invested at 4% per annum compounded semi-annually

amounts to ₹ 1,20,000 at the end of one year. Find the sum (Dec 2020)
(a) ₹ 1,10,120
(b) ₹ 1,15,340
(c) ₹ 1,12,812
(d) ₹ 1,13,113

14.₹ 2,500 is paid every year for 10 years to pay off a loan. What is the loan
amount if interest rate be 14% per annum compounded annually?...............
(Dec 2020)
(e) 13,040.27
(f) 15,847.90
(g) 14,674.21
(h) 16,345.11

15.The ratio of principal and the compound interest value for three years
(compounded annually) is 216: 127. The rate of interest is (Dec 2020)
(i) 0.1567
(j) 0.1777
(k) 0.1666
(l) 0.1588

Maths Magician Raj Awate

16.Find the present value of 1,00,000 be required after 5 years if the rate of
interest is 9% given that (1.09) = 1.5386. (Dec 2020)
(m) 78,995.98
(n) 64,994.20
(o) 88,992.43
(p) 93,902.12

17.Find the amount of compound interest, if an amount of ₹ 50,000 is

deposited in a bank for one year at the rate of 8% per annum compounded
semiannually… ( Jan 2021)
(a) 3080
(b) 4080
(c) 5456
(d) 7856

18.The population of a town increase by 2% of the population at the beginning

of the year. The number of year by which the total increases in population
would be 40% is: (Jan 2021)
(a) 7 years
(b) 10 years
(c) 17 years
(d) 19 years (approx.)

19.The simple on sum at $% p.a. for 2 years is ₹ 80. Find the CI on the same
sum for the same period. ( Jan 2021)
(a) ₹ 81.6
(b) ₹ 80.3
(c) ₹ 83.2
(d) ₹ 82.3

20.Which is a better investment 9% p.a. compounded quarterly or 9.1% p.a.

simple interest? (Jan 2021)
(a) 9% compounded
(b) 9.1% S.I.
(c) Both are same
(d) Cannot be said

Maths Magician Raj Awate

21.The effective rate of interest corresponding to a nominal rate of 7% p.a.
compounded quarterly is…. (Jan 2021)
(a) 7.5%
(b) 7.6%
(c) 7.7%
(d) 7.185%

22.A sum of money is lent at C.I. Rate 20% p.a. 2 years. It would fetch ₹ 482
more if the interest is compounded half yearly. the sum is: (Jan 2021)
(a) ₹ 19,800
(b) ₹ 19,900
(c) ₹ 20,000
(d) ₹ 20,100

23.What ‘I’ denote the actual rate of interest in decimal, and n denote the
number of conversion periods, the formula for computing the effective rate
of interest E is given by…. (Jan 2021)
n
(a) (1+i)
(b) (1+i)n-1
(c) 1-(1+i)n
(d) (1+i)-n

24.A sum of ₹ 7500 amounts to ₹ 9075 at 10% p.a. interest being compounded
yearly in a certain time. The simple interest (in₹) on the same sum for the
same time and the same rate is…. (July 2021)
(a) 1000
(b) 1250
(c) 1800
(d) 1500

25.If the desired future value after 5 years with 18% interest rate is ₹ 1,50,000,
then the present value (in₹) is (Given that (1.18)5 = 2.2877)………………..
(July 2021)
(a) 63,712
(b) 65,568
(c) 53,712
(d) 41,712

Maths Magician Raj Awate

26. What is the compound interest (in₹ ) on a sum of ₹ 12,600 for 11/2 years at
20% per annum if the interest is compounded half yearly? (Nearest to a
Rupee) ( July 2021)
(a) 4271
(b) 4171
(c) 4711
(d) 4117

27. A sum of ₹ x amounts to ₹ 27,900 in 3 years and to ₹ 41,850 in 6 years at a

certain rate per cent per annum, when the interest is compounded yearly.
The value of x is…. (July 2021)
(a) 16080
(b) 18600
(c) 18060
(d) 16800

28. The effective rate of return for 24% per annum convertible monthly is
given as ( July 2021)
(a) 24%
(b) 26.82%
(c) 18%
(d) 24.24%

29. What is the difference (in₹) between the simple interest and the
compound interest on a sum of ₹ 8,000 for 2 2 years at the rate of 10% p.a.
5
When the interest is compounded yearly? (July 2021)
(a) 135.75
(b) 129.50
(c) 151.75
(d) 147.20

30. S deposits an Amount in Bank which gives 10% compound interest,

compounded annually for 5 years. What is effective rate of simple interest?
(Dec 2021)
(a) 12.21

Maths Magician Raj Awate

 (b) 11.11
(c) 13.21
(d) 12.81

31.Cost of a laptop is ₹ 1,10,000 and its value depreciate 12% annually its life is
6 years its scrap value …………. Times its cost (Dec 2021)
(a) 0.44
(b) 0.42
(c) 0.45
(d) 0.48

32.If the compound interest earned at i% p.a. in n year is to be earned at s%

simple interest rate for n years, the s = … (Dec 2021)
(a) i
(b) i1/n
(c) (1+i)n-1
n
(d) 1-(1=i)n
N

33. A company needs ₹ 10,000 in five years to replace as equipment. How

much (in₹ ) must be invested now at the interest rate of 8% p.a. is order top
provide for the equipment? Dec 2021)
(a) ₹ 6,606
(b) ₹ 6,806
(c) ₹ 10,500
(d) ₹ 11,500
(e)
34. A sum of money is put at 20% compound interest rate p.a. At which year
the aggregated amount just exceeds the double of the original sum?............
(Dec 2021)
(a) 5
(b) 6
(c) 4
(d) 3

Maths Magician Raj Awate

35. A sum of money is put at 20% compound interest rate p.a. At which year
the aggregated amount just exceeds the double of the original sum?
……………………… (Dec 2021)
(a) 5
(b) 6
(c) 4
(d) 3

36. ₹800 is invested at the end of each month in an account paying interest 6%
per year compounded monthly. What is the future value of this annuity
after 10th payment? Given that 1.00510-1.0511 (June 2021)
(a) ₹ 4,444
(b) ₹ 8,766
(c) ₹ 3,491
(d) ₹ 8,176

Lokesh deposits 3,000 at the start of each quarter in his savings account. If
the account earns interest 5.75% per annum compounded quarterly, how
much money (in) will he have at the end of 4 years?
(1.01437516=1.25696)……………………… (June 2022)
(a) ₹ 53,624.4
(b) ₹ 58,353.6
(c) ₹ 68,353.6
(d) ₹ 63,624.4

37. An investment is earning compound interest, ₹ 100 invested in the

accumulated to 105 by year 4. If ₹ 500 invested in the year 5, will become
₹………… by year 10 (June 2022)
(a) 364.80
(b) 564.80
(c) 464,80
(d) 664.80

38.There is 60% increase in an amount in 6 years at simple interest. What will

be the compound interest of ₹12,000 after 3 years at the same
rate?................ (June 2022)
(a) ₹ 3,972

Maths Magician Raj Awate

 (b) ₹ 2,160
(c) ₹ 3,120
(d) ₹ 3,742

39. The present value of 2,000, after 8 years at the rate of 6% per annum,
is…………………… (1.068 = 1.59385) (June 2022)
(a) ₹ 1,054
(b) ₹ 1,254
(c) ₹ 3,054
(d) ₹ 2,054

40. A Machine worth ₹ 4,90,740 is depreciated at 15 on its opening value each

year. When its value would reduce to ₹ 2,00,750. (Dec 2022)
(q) 5 years 5 months
(r) 5 years 6 months
(s) 5 years 7 months
(t) 5 years 8 months
41. If ₹ 64 Amount to ₹ 83.20 in 2 years, what will ₹ 86 Amount to in 4 years at
the same. Rate per cent per annum? (Dec 2022)
(u) ₹ 127.60
(v) ₹ 147.60
(w) ₹ 145.34
(x) ₹ 117.60
42. The effective annual rate of interest corresponding to a normal rate of 6%
per annum payable half yearly is: (Dec 2022)
(y) 6.06%
(z) 6.07%
(aa) 6.08%
(bb) 6.09%
43. 10 years ago the Earning per Share (EPS) of ABC Ltd. was 5 share. Its EPS for
this year is 22. Compute at what rate, EPS of the company grow annually?
(Dec 2022)
(cc) 15.97%
(dd) 16.77%
(ee) 18.64%
(ff) 14.79%

Maths Magician Raj Awate

44. Mr. Prakash invested money in two schemes 'A' and 'B' offering compound
interest at the rate of 8% and 9% per annum respectively. If the total
amount of interest accrued through these two schemes together in two
years was ₹ 4818.30 and total amount invested was ₹ 27,000. What was the
amount invested in Scheme "A"? (Dec 2022)
(gg) ₹ 12,000
(hh) ₹ 12,500
(ii) ₹ 13,500
(jj) ₹13,000

45. A sum of money invested of compound interest doubles itself in four years.
In how many years it becomes 32 times of itself at the same rate of
compound interest (Dec 2022)
(kk) 12 years
(ll) 16 years
(mm) 20 years
(nn) 24 years

46. The difference between compound interest and simple interest on an

amount of ₹ 15,000 for 2 years is ₹96. What is the rate of interest per
annum? (Dec 2022)
(oo) 9%
(pp) 8%
(qq) 11%
(rr) 10%

47. A sum of money doubles itself in 4 years at certain compound interest rate.
In how many years this sum will become 8 times at the same compound
interest rate? (Dec 2022)
(ss) 12 years
(tt)14 years
(uu) 16 years
(vv) 18 years

Maths Magician Raj Awate

 Annuity

48.Determine the present value of perpetuity ₹ 10 per month for infinite

period at an effective rate of interest of 14% p.a.? (Dec 2020)
(a) ₹657
(b) ₹ 757
(c) ₹857
(d) ₹ 957

Maths Magician Raj Awate

49.Which of the following statement is true? (Dec 2020)
(e) F.V of ordinary annuity <F.V of annuity due
(f) F.V of ordinary annuity > F.V of annuity due
(g) P.V of ordinary annuity > P.V of annuity due
(h) None of these

50.Suppose you deposit 900 per month into an account that pays 14.8%
interest compounded monthly. How much money will you get after 9
months? (Dec 2020)
(i) ₹ 8,511
(j) ₹ 9,000
(k) ₹ 9,200
(l) ₹ 1,000

51.Assuming that the discount rate is 7% p.a. how much would pay to receive ₹
200 growing at 5% annually for ever? (Jan 2021)
(m) ₹ 2,500
(n) ₹ 5,000
(o) ₹ 7,500
(p) ₹ 10,000

52.₹ 800 is invested at the end of each month in an account paying interest 6%
per year compounded monthly. What is the future value of this annually
after 10th payment? (Jan 2021)
(q) ₹ 4,444
(r) ₹ 8,756
(s) ₹ 3,491
(t) ₹ 8,182

53.The present value of an Annuity immediate is the same as.. (Jan 2021)
(u) Annuity regular for (n-1) year plus the initial receipt in the
beginning of the period
(v) Annuity regular for (n - 1) years
(w) Annuity regular for (n + 1) years

Maths Magician Raj Awate

 (x) Annuity regular for (n + 1) years plus the initial receipt in the
beginning of the period

54.Find the future value of annuity of ₹ 1,000 made annually for 7 year at
interest rate of 14% compounded annually (Given that 1.147-2.5023)………..
(Jan 2021)
(y) ₹ 10,730.7
(z) ₹ 5,365.35
(aa) ₹ 8,756
(bb) ₹ 9892.34

55.A loan of ₹ 1,02,000 is to be paid back in two equal annual instalments. If

the rate of interest is 4% p.a., compounded annually, then the total interest
charged (in₹) under this instalment plan is.... (July 2021)
(cc) 6160
(dd) 8120
(ee) 5980
(ff) 7560

56.If the nominal rate of growth is 17% and inflation is 9% for the five years.
Let P be the Gross Domestic Product (GDP) amount at the present year then
the projected real GDP after 6 years is... (July 2021)
(gg) 1.587 P
(hh) 1.921 P
(ii) 1.403 P
(jj) 2.51 P
57. If a person bought a house by paying ₹ 45,00,000 down payment and ₹
80,000 at the end of each year till the perpetuity, assuming the rate of
interest as 16%, the present value of house (in₹) is given as (July 2021)
(kk) 47,00,000
(ll) 45,00,000
(mm) 57,80,000
(nn) 50,00,000

58. Let the operating profit of a manufacturer for five years is given as :

Maths Magician Raj Awate

 Year 1 2 3 4 5 6
Operating Profit (in lakh ₹) 90 100 106.4 107.14 120.24 157.35
Then the operating profit of Compound Annual Growth Rate (CAGR) for
year 6 with respect to year 2 is given at (July 2022)
(a) 9%
(b) 12%
(c) 11%
(d) 13%

59. If discount rate is 14% per annum, then how much a company has to pay to
receive ₹ 280 growing at 9% annually forever. (July 2022)
(oo) ₹ 5,600
(pp) ₹ 2,800
(qq) ₹ 1,400
(rr) ₹ 4,200

60. If the cost of capital be 12% per annum, then the net present value (in
Nearest ₹) from the given cash flow is given as (July 2021)
Year 0 1 2 3
Operating profit (in thousands ₹) (100) 60 40 50
(a) 31048
(b) 34185
(c) 51048
(d) 24187
61. The future value of annuity of ₹ 2,000 for 5 years at 5% compounded
annually is given (in nearest ₹ ) as (July 2021)
(ss) 51051
(tt)21021
(uu) 15624
(vv) 61254
62. Mr.X wants to accumulate ₹ 50,00,000 at the end of 10 years. Then how
much amount is required to be invested every year if interest is
compounded annually at 10% (Given that P(10,0.10) = 15.9374298)
………………… (Dec 2021)

Maths Magician Raj Awate

 (ww) ₹ 3,13,726.87
(xx) ₹ 4,13,726.87
(yy) ₹ 3,53,726.87
(zz) ₹ 4,53,726.87

63. The present value of an annuity of ₹ 25,000 to be received after 10 years at

6% per annum compounded annually is ₹ ………………. (1.065 = 1.33823)
(Dec 2021)
(aaa) ₹ 15,960
(bbb) ₹ 13,960
(ccc) ₹ 11,960
(ddd) ₹ 17,960

64. Find the future value of annuity of ₹ 1,000 made annually for 7 years at
interest rate 14% compounded annually. Given that (1.14)7 = 2.5023………….
(June 2022)
(eee) ₹ 10,730.71
(fff) ₹ 5,365.35
(ggg) ₹ 8,756
(hhh) ₹ 9.892.34

65. Assuming that the discount rate is 7% p.a. How much would you pay to
receive ₹ 200. Growing at 5% annually forever? (June 2022)
(iii) ₹ 2,500
(jjj) ₹ 5,000
(kkk) ₹ 7,500
(lll) ₹ 10,000

66. ₹ 2,500 is paid every year for 10 years to pay off a loan. What is the loan
amount if interest rate be 14% p.a. compounded annually? ……………..
(June 2022)
(mmm) ₹ 15,847.90
(nnn) ₹ 13,040.27
(ooo) ₹ 14,674.21
(ppp) ₹ 16,345.11

Maths Magician Raj Awate

67. Raj made an investment of ₹ 15,000 in scheme and at the time of maturity
the amount was ₹ 25,000. If Compound Annual Growth Rate (CAGR) for this
investment is 8.88%. Calculate the approximate number of years for which
he has invested the amount. (June 2022)
(qqq) 6
(rrr) 7.7
(sss) 5.5
(ttt) 7

68. Madhu takes a loan of ₹ 50,000 from XYZ Bank. The rate of interest is 10%
per annum. The first instalment will be paid at the end of year 5. Determine
the amount (in ₹) of equal instalments, if Madhu wishes to repay the
amount in five instalments. (June 2022)
(uuu) ₹ 19,510
(vvv) ₹ 19,430
(www) ₹ 19,310
(xxx) ₹ 19,630

69. Ramesh invests ₹ 20,000 per year in a stock index fund, which earns 9% per
year, for the next ten years. What would be the closest value of the
accumulated value of the investment upon payment of the last instalment?
(1.0910 = 2.36736) (June 2022)
(yyy) ₹ 3,88,764.968
(zzz) ₹ 3,03,858.594
(aaaa) ₹ 2,68,728.484
(bbbb) ₹ 4,08,718.364

70. A company creates a sinking fund of ₹ 2,00,000 in a bank account for 15

years bank offers interest rate 6% per annum the yearly payment to be paid
by company is approximately (if need, use: 1.06¹4 = 2.209)……………….
(June 2022)
(cccc) ₹ 8,945
(dddd) ₹ 8,145
(eeee) ₹ 9,345

Maths Magician Raj Awate

 (ffff) ₹ 9,645

71. How much amount is required to be invested every year so as to

accumulate ₹ 5,00,000 at the end of 12 years if interest is compounded
annually at 10%? (Where A (12, 0.1) =21.384284). (Dec 2022)
(gggg) ₹ 23381.65
(hhhh) ₹ 24385.85
(iiii) ₹ 26381.65
(jjjj) ₹ 28362.75

72. Raju invests ₹ 20,000 every year in a deposit scheme starting from today
for next 12 years. Assuming that interest rate on this deposit is 7% per
annum compounded annually. What will be the future value of this
annuity? Given that (1+0.07) ¹2 = 2.25219159. (Dec 2022)
(kkkk) ₹ 5,40,526
(llll) ₹ 3,82,813
(mmmm) ₹ 6,43,483
(nnnn) ₹ 3,57,769

73. Mr. A invested ₹ 10,000 every year for next 8 year cent per annum
compounded annually. What is future value of the annuity? (Dec 2022)
(oooo) 32,644
(pppp) 32,464
(qqqq) 34,4264
(rrrr) 36,442

74. ₹ 5,000 is invested every month end in an account paying interest @ 12%
per annum compounded monthly. What is the future value of this annuity
just after making 11th payment? (Given that (1.01) 11- 1.1156) (Dec 2022)
(ssss) ₹ 57,800
(tttt) ₹ 56,100
(uuuu) ₹ 56,800
(vvvv) ₹ 57,100

75. Sinking fund factor is the reciprocal of: (Dec 2022)

Maths Magician Raj Awate

 (wwww) Present value interest factor of a single cash flow
(xxxx) Present value interest factor of an annuity
(yyyy) Future value interest factor of an annuity
(zzzz) Future value interest factor of a single cash flow

Maths Magician Raj Awate