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Simple and compound interest practice questions for bank exams

By the PrepMatic team · Updated 9 Oct 2026 · 3 min read

Simple interest (SI) is charged only on the original sum, so it grows by the same amount every year. Compound interest (CI) is charged on the sum plus the interest already earned, so it grows faster each year. Bank exams ask both as short word problems, often with a twist such as an unknown rate or a sum split in two. The five questions below are at prelims and mains-arithmetic level.

Formulas and shortcuts

Memorise these compounding factors so you rarely multiply by hand:

Five practice questions

Question 1

The simple interest on a sum for 3 years at 8% per annum is ₹3,600. What is the sum?

• A. ₹12,000
• B. ₹14,400
• C. ₹15,000
• D. ₹16,500

Question 2

What is the difference between the compound interest and the simple interest on ₹10,000 for 2 years at 5% per annum?

• A. ₹25
• B. ₹50
• C. ₹75
• D. ₹250

Question 3

A sum of money doubles itself in 8 years at simple interest. In how many years will it become three times itself?

• A. 12 years
• B. 16 years
• C. 20 years
• D. 24 years

Question 4

A sum at compound interest amounts to ₹5,832 in 2 years and ₹6,298.56 in 3 years. What is the rate of interest per annum?

• A. 6%
• B. 7%
• C. 8%
• D. 9%

Question 5

₹12,000 is lent in two parts, one at 6% and the other at 8% per annum simple interest. The total interest after 2 years is ₹1,600. What is the part lent at 6%?

• A. ₹4,000
• B. ₹6,000
• C. ₹7,000
• D. ₹8,000

Answers and explanations

1. C. P = SI × 100 ÷ (R × T) = 3,600 × 100 ÷ (8 × 3) = 15,000.
2. A. Use the shortcut P × (R/100)² = 10,000 × 0.05² = 10,000 × 0.0025 = ₹25. Check: CI is 1,025 and SI is 1,000.
3. B. The sum doubles, so the interest equals the sum in 8 years, which means R = 100 ÷ 8 = 12.5%. To triple, the interest must be twice the sum, which needs 2 × 8 = 16 years.
4. C. The amount grew from 5,832 to 6,298.56 in the third year, a rise of ₹466.56. Divide by the starting amount: 466.56 ÷ 5,832 = 0.08, so the rate is 8%.
5. D. The average rate over the sum is 1,600 ÷ (12,000 × 2) × 100 = 6 2/3%. By alligation, the 6% part to the 8% part is (8 − 6 2/3) : (6 2/3 − 6) = 4/3 : 2/3 = 2 : 1. So ₹8,000 is lent at 6% and ₹4,000 at 8%. Check: 960 + 640 = 1,600.

How to prepare interest questions

• Pick the right formula first. The words "compounded", "amounts to" over several years and "half-yearly" signal CI. Plain "interest" means SI.
• Use the difference shortcut. CI minus SI for two years is P(R/100)², and for three years it is P(R/100)² × (3 + R/100). Many options differ exactly by this.
• Use successive percentage rises. For CI over two years at 10%, the rise is 10 + 10 + 1 = 21%, so P × 0.21 gives the interest straight away.
• Use alligation for split investments as in Question 5. It is much faster than forming two equations. The mixture and alligation page drills the method.
• Compare year-on-year amounts. If a CI question gives two consecutive amounts, one year's interest divided by the earlier amount gives the rate (Question 4).
• Watch the units. Months must be converted to years, and half-yearly compounding halves the rate and doubles the periods.

A fair target is 45 seconds for SI and 60 seconds for CI. When a CI question looks heavy, test whether the numbers are chosen to fit a factor from the table.

The full simple and compound interest topic test is on PrepMatic (about 15 questions, 30 minutes). The Quantitative Aptitude guide puts interest in context with other Quant topics, and the bank exam hub links each exam's pattern.

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