Compund Interest

Q.

Compound interest is the interest calculated on the previous year’s amount. State whether the statement is true (T) or false (F).

1. True
2. False

Q. Interest paid on both the principal and on accrued interest is called

1. simple interest
2. interest yearly compounded
3. compound interest
4. interest half yearly compounded

Q.

The compound interest on $\$1000$ in 2 years compounded yearly is $\$440.$ Find the rate of interest

1. $20\%$
2. $10\%$
3. $15\%$
4. $12\%$

Q. Statement $I$: In compound interest, the interest from the previous year contributes to the current year's interest.
Statement $II$: In simple interest, only the principal amount contributes to the current year's interest.

1. Only statement $I$ is correct.
2. Only statement $I$ is correct.
3. Both statement $I$ and $II$ are correct.

4. None of the statements is correct.

Q. What is the difference between the compound interests on $\$400$ for 1 year at 10% per annum compounded yearly and half-yearly?
$

Q.

Why is simple interest useful?

Q.

Find the compound interest, if $\$4000$ was invested for 1 year at 10% per annum
compounded half-yearly?

1. $\$400$
2. $\$820$
3. $\$500$
4. $\$410$