Simple Interest and Compound Interest

1) Raman deposit Rs.2,00,000 in a bank for 1 year at the rate of 8% p.a. What is the quarterly interest payable? 2) Supposing Raman wants to draw monthly interest on the above Fixed Deposit, what will be the amount he receives? Will there be any deductions? 3) Supposing in the above case if Raman were to opt for Cumulative Fixed Deposit, what would be the maturity value payable? 4) Meena invests Rs.2,00,000 in a cumulative fixed deposit for 6 months. What is the maturity value if the interest rate is 9% p.a. compounded quarterly?

Power of Compounding
5) Mr.Saxena sells his property for Rs.10 lakhs and gives Rs.5 lakhs each to his two sons Rahul and Mehul. Rahul invests his money in Ordinary Fixed Deposit at 8% pa and Mehul invests his money in Cumulative Fixed Deposit in a Bank. Assuming the deposit periods to be 1, 5, 10, 15, 20 years, compare interest earned by Rahul and Mehul.

Rahuls Interest Earnings P in Rs. R% T in Yrs. SI 5L 8 1 5L 8 5 5L 8 10 5L 8 15 5L 8 20

Mehuls Interest Earnings P in Rs. R% T in Yrs. CI 5L 8 1 5L 8 5 5L 8 10 5L 8 15 5L 8 20

Difference in the interest earned by Rahul &Mehul T in Yrs Rahul Mehul Difference 1 40000 41216 1216 5 200000 242974 42974 10 400000 604020 204020 15 600000 1140515 540515 20 800000 1937720 11337720

Fixed and Floating Rate of Interest

6) Sudhir and Kumar get Rs.10 lakhs each from their father. A bank offers them an interest rate of 6.5% pa for 3 years. On Jan 1 2003, they place their money in a fixed deposit with the bank as follows. Sudhir deposits his money in a fixed deposit for 3 years whereas Kumar deposits it for one year and renews the principal twice on due dates. The bank announced a change in interest as follows.

May 1 2003 Aug 10 2004 June 1, 2005

7.5% pa 6% pa 5% pa

Calculate the interest earned by Sudhir and Kumar for 3 years. 7) Komal has taken a housing loan of Rs.10 lakhs at 13% pa fixed rate in 1st Jan 2003 for a period of 120 months. Who gains the bank or Komal if the interest rate on home loans comes down to 10% per annum during 1stJan 2006? And how much?

Exercise 8) Rodrigues places Rs.5 lakhs in a fixed deposit for 5 years at 9% pa simple interest payable quarterly. Calculate the quarterly interest received by him. 9) Malkiat Singh wants to get Rs.5000 per month interest for monthly expenses. What is the deposit amount he should place if the interest rate is 7% pa? ( Ignore the discount deduction) 10) Deepika places an ordinary fixed deposit of Rs.330000 for 181 days. The rate of interest is 5.5% pa. What is the interest received by her at the end? 11) Kokilaben invests Rs.50000 in the name of her child for 10 years at 7.5% pa compounded quarterly. What is the maturity value of the deposit? 12) Shantharam makes the following deposits on 1.1.2006 for a period of 5 years. a) Cumulative FD of Rs.7lakhs at 7% pa b) Fixed deposit of Rs. 5 lakhs at 7% pa, interest payable quarterly. c) Fixed deposit of Rs.1 lakh at 7% pa, interest to be paid every month.

How much money would Shantharam receive on 1.1.2011.