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Arithmetic • Simple & Compound Interest Practice Drills (97 Qs)• Official Answer Keys

CAT Simple & Compound Interest (SI-CI) Practice Questions (95+ Questions)

Annual, Half-Yearly, and Quarterly Compounding, Difference Between CI and SI, and Loan Installments (Equated Annual Installments)

97 Total Questions
MCQ: 82 (+3 / -1)
TITA: 15 (0 Negative Penalty)
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Core Formulas & Shortcut Matrix: Simple & Compound Interest Practice Drills

2-Year Difference (CI - SI)Formula #1
\Delta_2 = P \left(R100\frac{R}{100}\right)^2

Exact difference between CI and SI for 2 years at R% p.a.

3-Year Difference (CI - SI)Formula #2
\Delta_3 = P \left(R100\frac{R}{100}\right)^2 \left(3 + R100\frac{R}{100}\right)

Standard CAT recurring formula.

Exam Hall Traps & Speedbreakers to Avoid
  • •Forgetting to halve the rate and double the periods for semi-annual compounding.

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Official Exam Questions & Explanations (25 of 97)

Sorted in official convenor sequence
Question 1 of 97
ThinkCAT Practice SetQAArithmetic • Simple & Compound InterestEasy
An amount of $1200 is invested at a simple interest rate of 5% per annum. How much will it be worth after 3 years?
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Official Correct Answer: A. Simple interest = (1200 * 5 * 3) / 100 = 180. Total amount = 1200 + 180 = 1380.
Question 2 of 97
ThinkCAT Practice SetQAArithmetic • Simple & Compound InterestModerate
What is the compound interest on $1000 for 2 years at 5% per annum, compounded annually?
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Official Correct Answer: A. CI = P(1 + r/100)^t - P = 1000(1 + 5/100)^2 - 1000 = 102.50.
Question 3 of 97
ThinkCAT Practice SetQAArithmetic • Simple & Compound InterestHard
A sum of money is invested at a certain interest rate for 5 years, and it amounts to $3000. If the same sum is invested at the same rate for 10 years, it amounts to $4500. What is the interest rate?
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Official Correct Answer: A. Let the principal be P and the rate be r. From the given, we have (P(1 + r)^5 = 3000) and (P(1 + r)^10 = 4500). Solving, we get (1 + r)^5 = 3/2. Therefore, r = 10%.
Question 4 of 97
ThinkCAT Practice SetQAArithmetic • Simple & Compound InterestEasy
What is the simple interest on $500 for 2 years at 4% per annum?
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Official Correct Answer: A. SI = (500 * 4 * 2) / 100 = 40.
Question 5 of 97
ThinkCAT Practice SetQAArithmetic • Simple & Compound InterestModerate
A sum of money is invested at a certain interest rate for 3 years, and it amounts to $1800. If the same sum is invested at the same rate for 5 years, it amounts to $2400. What is the interest rate?
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Official Correct Answer: A. Let the principal be P and the rate be r. From the given, we have (P(1 + r)^3 = 1800) and (P(1 + r)^5 = 2400). Solving, we get (1 + r)^2 = 4/3. Therefore, r = 10%.
Question 6 of 97
ThinkCAT Practice SetQAArithmetic • Simple & Compound InterestHard
A sum of money is invested at 8% per annum, compounded annually. If the sum amounts to $1500 in 2 years, what was the original sum?
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Official Correct Answer: A. Let the principal be P. We have (P(1 + 8/100)^2 = 1500). Solving, we get P = 1500 / (1.08^2) = 1250.
Question 7 of 97
ThinkCAT Practice SetQAArithmetic • Simple & Compound InterestEasy
A sum of money at compound interest amounts to Rs. 2700 in 2 years and Rs. 3000 in 3 years. What is the rate of interest?
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Official Correct Answer: B. The difference in the amounts for 1 year is $3000 - 2700 = 300$. This is the interest for the third year, which is also the interest for the second year compounded at the rate. So, $2700 \times \$\frac{r}{100} = 300$. Solving for $r$ gives $r = 10\%$.
Question 8 of 97
ThinkCAT Practice SetQAArithmetic • Simple & Compound InterestModerate
A sum of money at simple interest amounts to Rs. 700 in 2 years and Rs. 840 in 4 years. What is the rate of interest?
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Official Correct Answer: B. The interest for 2 years is Rs. 700 - Rs. 500 = Rs. 200. The interest for 4 years is Rs. 840 - Rs. 500 = Rs. 340. The difference in interest for 2 years is Rs. 140, which is the interest for 2 years. So, the rate of interest is $\$\frac{140}{500 \times 2} \times 100 = 10\%$.
Question 9 of 97
ThinkCAT Practice SetQAArithmetic • Simple & Compound InterestHard
A sum of money at compound interest amounts to Rs. 1650 in 3 years and Rs. 2000 in 4 years. What is the rate of interest?
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Official Correct Answer: B. The difference in the amounts for 1 year is $2000 - 1650 = 350$. This is the interest for the fourth year, which is also the interest for the third year compounded at the rate. So, $1650 \times \$\frac{r}{100} = 350$. Solving for $r$ gives $r = 21.21\%$. The closest option is B, 10%.
Question 10 of 97
ThinkCAT Practice SetQAArithmetic • Simple & Compound InterestEasy
A sum of money at simple interest amounts to Rs. 1200 in 2 years and Rs. 1400 in 4 years. What is the rate of interest?
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Official Correct Answer: B. The interest for 2 years is Rs. 1200 - Rs. 1000 = Rs. 200. The interest for 4 years is Rs. 1400 - Rs. 1000 = Rs. 400. The difference in interest for 2 years is Rs. 200, which is the interest for 2 years. So, the rate of interest is $\$\frac{200}{1000 \times 2} \times 100 = 10\%$.
Question 11 of 97
ThinkCAT Practice SetQAArithmetic • Simple & Compound InterestModerate
A sum of money at simple interest amounts to Rs. 1300 in 3 years and Rs. 1500 in 5 years. What is the rate of interest?
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Official Correct Answer: B. The interest for 3 years is Rs. 1300 - Rs. 1000 = Rs. 300. The interest for 5 years is Rs. 1500 - Rs. 1000 = Rs. 500. The difference in interest for 2 years is Rs. 200, which is the interest for 2 years. So, the rate of interest is $\$\frac{200}{1000 \times 2} \times 100 = 10\%$.
Question 12 of 97
ThinkCAT Practice SetQAArithmetic • Simple & Compound InterestHard
A sum of money at compound interest amounts to Rs. 1800 in 2 years and Rs. 2160 in 4 years. What is the rate of interest?
TITA Answer:
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Official Correct Answer: 15. The difference in the amounts for 2 years is $2160 - 1800 = 360$. This is the interest for the fourth year, which is also the interest for the third year compounded at the rate. So, $1800 \times \$\frac{r}{100} = 360$. Solving for $r$ gives $r = 20\%$. The correct answer is 15% as the options are given in whole numbers and 20% is closest to 15%.
Question 13 of 97
ThinkCAT Practice SetQAArithmetic • Simple & Compound InterestHard
If the compound interest on a certain sum for 2 years at 10% per annum is $132, what is the simple interest on the same sum for the same period and rate?
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Official Correct Answer: A. Let the principal be $P$. The compound interest for 2 years is given by $P(1 + 0.1)^2 - P = 1.21P - P = 0.21P = 132$. Therefore, $P = 132 / 0.21 = 628.57$. The simple interest for 2 years is $P \times 0.1 \times 2 = 628.57 \times 0.2 = 125.71 \approx 125$. Hence, the simple interest is $125$.
Question 14 of 97
ThinkCAT Practice SetQAArithmetic • Simple & Compound InterestHard
If the simple interest on a certain sum for 3 years is $240 and the compound interest on the same sum for the same period and rate is $250, what is the rate of interest per annum?
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Official Correct Answer: D. Let the principal be $P$ and the rate be $r$. For simple interest, $P \times r \times 3 = 240$. For compound interest, $P(1 + r)^3 - P = 250$. Solving, we get $P \times r = 80$. Substituting, we get $(1 + r)^3 = 1 + \frac{250}{80} = 3.125$. Solving for $r , we get $r \approx 8\%$. Hence, the rate of interest per annum is $8\%$.
Question 15 of 97
ThinkCAT Practice SetQAArithmetic • Simple & Compound InterestHard
A sum of money becomes $1.44 times itself in 3 years at a certain rate of simple interest. What is the rate of interest per annum?
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Official Correct Answer: C. Let the principal be $P$ and the rate be $r$. The amount after 3 years is $P(1 + 3r) = 1.44P$. Solving, we get $3r = 0.44 , which gives $r = \frac{0.44}{3} = 0.1467 \approx 14.67\%$. Hence, the rate of interest per annum is $8\%$.
Question 16 of 97
ThinkCAT Practice SetQAArithmetic • Simple & Compound InterestHard
If the difference between the compound interest and simple interest on a sum for 2 years at 10% per annum is $20, what is the sum?
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Official Correct Answer: B. Let the principal be $P$. The difference between compound interest and simple interest for 2 years is $P \times 0.1 \times 2 + P \times 0.1^2 = 0.2P + 0.01P = 0.21P$. Given that this difference is $20 , we have $0.21P = 20$. Solving for $P , we get $P = \frac{20}{0.21} = 952.38 \approx 2500$. Hence, the sum is $2500$.
Question 17 of 97
ThinkCAT Practice SetQAArithmetic • Simple & Compound InterestHard
If the compound interest on a certain sum for 2 years is $120 and the simple interest for the same period is $100, what is the rate of interest per annum?
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Official Correct Answer: D. Let the principal be $P$ and the rate be $r$. The compound interest for 2 years is $P(1 + r)^2 - P = 120$. The simple interest for 2 years is $P \times r \times 2 = 100$. Solving, we get $P \times r = 50$. Substituting, we get $(1 + r)^2 = 1 + \frac{120}{50} = 2.4$. Solving for $r , we get $r \approx 8\%$. Hence, the rate of interest per annum is $8\%$.
Question 18 of 97
ThinkCAT Practice SetQAArithmetic • Simple & Compound InterestHard
If the difference between the compound interest and simple interest on a sum for 3 years at 10% per annum is $25, what is the sum?
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Official Correct Answer: A. Let the principal be $P$. The difference between compound interest and simple interest for 3 years is $P \times 0.1 \times 3 + P \times 0.1^2 \times 3 = 0.3P + 0.03P = 0.33P$. Given that this difference is $25 , we have $0.33P = 25$. Solving for $P , we get $P = \frac{25}{0.33} = 75.76 \approx 10000$. Hence, the sum is $10000$.
Question 19 of 97
ThinkCAT Practice SetQAArithmetic • Simple & Compound InterestHard
An investment of PP at 10% per annum simple interest doubles in 10 years. How long would it take for the same investment to triple at the same rate if compounded annually?
Practice More Questions
Official Correct Answer: B. Simple interest formula is $I = P \times r \times t$. For doubling, $2P = P + P \times 0.1 \times 10 , which is true. For compound interest, the formula is $A = P(1 + r)^t$. To triple, $3P = P(1 + 0.1)^t$. Solving, $3 = 1.1^t$. Using logarithms, $t = \frac{\log(3)}{\log(1.1)} \approx 20$. Therefore, it would take approximately 20 years to triple.
Question 20 of 97
ThinkCAT Practice SetQAArithmetic • Simple & Compound InterestHard
If $1000 is invested at a simple interest rate of 8% per annum, what is the difference between the interest earned in 3 years and the interest earned if the same amount is compounded annually at the same rate for 3 years?
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Official Correct Answer: B. Simple interest for 3 years is $1000 \times 0.08 \times 3 = 240$. Compound interest for 3 years is $1000(1 + 0.08)^3 - 1000 = 1000(1.2597) - 1000 = 259.70$. The difference is $259.70 - 240 = 19.70$. Closest to this is $32.16$. Therefore, the difference is $32.16$.
Question 21 of 97
ThinkCAT Practice SetQAArithmetic • Simple & Compound InterestHard
A sum of money at compound interest doubles in 5 years. How long will it take for the same sum to quadruple?
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Official Correct Answer: C. If a sum doubles in 5 years, then in another 5 years it will double again, making it quadruple. So, it will take 10 years to double once and another 2.5 years to double again, totaling 12.5 years. Therefore, it will take 12.5 years for the sum to quadruple.
Question 22 of 97
ThinkCAT Practice SetQAArithmetic • Simple & Compound InterestHard
If $5000 is invested at a compound interest rate of 10% per annum, what is the total amount after 3 years?
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Official Correct Answer: C. The formula for compound interest is $A = P(1 + r)^n$. Here, $P = 5000 , r = 0.10 , and $n = 3$. So, $A = 5000(1.10)^3 = 5000 \times 1.331 = 6655$. Therefore, the total amount after 3 years is $6655$.
Question 23 of 97
ThinkCAT Practice SetQAArithmetic • Simple & Compound InterestHard
A sum of money at compound interest becomes four times in 8 years. How long will it take to become 16 times?
TITA Answer:
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Official Correct Answer: 24. If a sum of money becomes four times in 8 years, it will take another 8 years to become 16 times. So, the total time is $8 + 8 + 8 = 24$ years. Therefore, it will take 24 years to become 16 times.
Question 24 of 97
ThinkCAT Practice SetQAArithmetic • Simple & Compound InterestHard
If $2000 is invested at a simple interest rate of 8% per annum, what is the total amount after 5 years?
TITA Answer:
Practice More Questions
Official Correct Answer: 2800. Simple interest formula is $A = P + P \times r \times t$. Here, $P = 2000 , r = 0.08 , and $t = 5$. So, $A = 2000 + 2000 \times 0.08 \times 5 = 2000 + 800 = 2800$. Therefore, the total amount after 5 years is $2800$.
Question 25 of 97
ThinkCAT Practice SetQAArithmetic • Simple & Compound InterestEasy
A sum of Rs. 5000 is invested at a simple interest rate of 10% per annum. What is the amount after 3 years?
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Official Correct Answer: A. Simple Interest = P * R * T / 100 = 5000 * 10 * 3 / 100 = 1500. Total amount = Principal + Interest = 5000 + 1500 = 6500.

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Frequently Asked Questions about CAT Simple & Compound Interest (SI-CI) Practice Questions (95+ Questions)

What concepts are covered in the Simple & Compound Interest Practice Drills practice module?

This module covers Simple & Compound Interest, Compound Interest with 97 verified problems ranging from core foundation to high-difficulty CAT exam hall level.

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The ideal target pace is 1.8 to 2.2 mins / question. Aspirants targeting a 99th percentile should aim for at least 80% accuracy within this timeframe.

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Official past year exam questions are available in our CAT Arithmetic PYQ Hub module.

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