Chapter 2 · Class 9 ICSE · MCQ Test
Compound Interest MCQ Test — Class 9 ICSE
Practice 10 multiple-choice questions with instant answer reveal and explanations.
Compound Interest — MCQ Questions
1What is the formula for compound interest?
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Answer: A = P(1 + r/100)^n
Hint: Compound interest grows exponentially, not linearly.
Solution:
The compound interest formula is: — A = P(1 + r/100)^n
Where A = Amount, P = Principal, r = rate per annum, n = number of years.
2Find the compound interest on Rs 1000 at 10% per annum for 1 year.
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Answer: Rs 100
Hint: For 1 year, CI equals SI.
Solution:
A = P(1 + r/100)^n — A = 1000(1 + 10/100)^1 = 1000 x 1.1 = 1100
CI = A - P — CI = 1100 - 1000 = Rs 100
3Find the amount when Rs 5000 is invested at 8% per annum compounded annually for 2 years.
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Answer: Rs 5832
Hint: Use A = P(1 + r/100)^n with P = 5000, r = 8, n = 2.
Solution:
Apply the formula: — A = 5000(1 + 8/100)^2
Calculate: — A = 5000 x (1.08)^2 = 5000 x 1.1664 = Rs 5832
4The difference between CI and SI on a sum for 2 years at 10% per annum is Rs 50. Find the sum.
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Answer: Rs 5000
Hint: For 2 years, CI - SI = P(r/100)^2.
Solution:
The difference between CI and SI for 2 years: — CI - SI = P(r/100)^2
Substitute: — 50 = P(10/100)^2 = P(1/100)
Solve: — P = 50 x 100 = Rs 5000
5A sum of Rs 2000 is compounded annually at 5% for 3 years. What is the amount?
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Answer: Rs 2315.25
Hint: A = 2000(1.05)^3. Calculate step by step.
Solution:
A = P(1 + r/100)^n — A = 2000(1 + 5/100)^3
Year 1: — 2000 x 1.05 = 2100
Year 2: — 2100 x 1.05 = 2205
Year 3: — 2205 x 1.05 = 2315.25
6In how many years will Rs 1000 become Rs 1331 at 10% compound interest per annum?
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Answer: 3 years
Hint: Express 1331/1000 as a power of 1.1.
Solution:
A/P = (1 + r/100)^n — 1331/1000 = (1.1)^n
Note: — 1.331 = (1.1)^3
So n = 3 years.
7What is the SI on Rs 4000 at 5% for 2 years?
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Answer: Rs 400
Hint: SI = P x r x t / 100.
Solution:
SI formula: — SI = P x r x t / 100
Calculate: — SI = 4000 x 5 x 2 / 100 = Rs 400
8If the rate is compounded half-yearly, what rate and time period do you use for 10% per annum for 2 years?
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Answer: 5% for 4 periods
Hint: For half-yearly compounding, halve the rate and double the time periods.
Solution:
For half-yearly compounding:
Rate per period: — 10/2 = 5%
Number of periods: — 2 x 2 = 4 half-years
9Find the CI on Rs 10000 at 20% per annum for 1 year compounded half-yearly.
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Answer: Rs 2100
Hint: Use rate = 10% per half-year and n = 2 half-years.
Solution:
Rate per half-year = 10%, n = 2 half-years.
Amount: — A = 10000(1 + 10/100)^2 = 10000 x 1.21 = 12100
CI: — 12100 - 10000 = Rs 2100
10The population of a town is 10000. It increases at 10% per annum. What will it be after 1 year?
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Answer: 11000
Hint: Population growth uses the same formula as compound interest.
Solution:
Population after 1 year: — P = 10000(1 + 10/100)^1 = 10000 x 1.1 = 11000
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Tips for Compound Interest MCQs
- 1Read each question carefully and identify what is being asked before looking at the options.
- 2Try to solve the problem mentally or on paper first, then match your answer with the options.
- 3Use elimination — rule out clearly wrong options to improve your chances even when unsure.
- 4Check units, signs, and edge cases — these are common traps in Compound Interest MCQs.
- 5Review your mistakes after completing the test to build lasting understanding.
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