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CAT Exam - Simple Interest and Compound Interest Questions & Answers, LR & DI | Day 10
CAT Exam - Simple Interest and Compound Interest Questions: In this article of Careers360, you will find simple ways to solve Simple Interest and Compound Interest problems that come in the CAT exam 2025. After learning about Profit and Loss methods, Data Interpretation tricks, and reading improvements on Day 9, we move to Day 10 of your CAT preparation journey. Simple Interest and Compound Interest questions often worry many CAT exam students because they seem confusing and take a considerable amount of time to solve.
This Story also Contains
- Part 1: Quantitative Aptitude For CAT 2025
- Part 2: Logical Reasoning And Data Interpretation
- Part 3: VARC (Grammar tenses for CAT 2025 Exam)
- Free PDFs for CAT 2025 preparation
Our step-by-step 60-day study plan ensures you learn all topics thoroughly without rushing. When you solve the CAT previous year question papers, you will notice that numerical problems follow similar patterns every year. Using good CAT preparation books and following our simple CAT 2025 preparation strategies, you can turn these complex topics into easy-scoring topics. Using the best CAT preparation books along with our CAT preparation tips will make these tough topics much easier to understand and solve during your real CAT exam.
Part 1: Quantitative Aptitude For CAT 2025
Simple Interest And Compound Interest Concept
Simple Interest and Compound Interest are two of the most basic concepts in mathematics, here we will discuss, what is simple interest and compound interest, simple interest and compound interest for cat, Simple Interest and compound interest formulas, the difference between simple interest and Compound Interest formulas, simple interest and compound interest questions etc.
Simple Interest
Simple interest is defined as the interest calculated on the principal amount only; it does not take into account the interest on the interest.
For example, if you give your friend Rs. 1000, after 3 years he returns Rs. 1300.
You have received an additional Rs. 300. This Rs. 300 is the simple interest for 3 years at the rate of 10% per annum.
The simple interest (SI) is calculated by multiplying the principal by the rate of interest and time (in years). The formula is:
SI = (P × R × T) / 100
Where, P = Principal Sum
R = rate of interest at which the sum is borrowed or lent
T = time period (the duration for which money is borrowed or deposited)
Alternatively,
Calculate the interest for 1 year and multiply it by the time for which interest is to be calculated.
Compound Interest
Compound interest is the most common type of interest that we encounter in our daily lives. It depends on both the principal and the total interest accrued so far. When calculating Compound Interest, we add the previous interest amount to the principal and take that sum as the new principal.
We can understand this by following the example:
Let Rs 1000 be lent at the rate of 20% per annum compounded annually for 3 years.
Principal = Rs. 1000
Year-Wise Interest
1st year: 20% of 1000 = 200
2nd year: 20% of (1000 + 200) = 200 + 40 = 240
3rd year: 20% of (1200 + 240) = 240 + 48 = 288
Total Interest for 3 years = 200 + 240 + 288 = Rs 728.
Alternatively, we can use the formula.
A = P×(1 + R/100)n
Where,
A = Amount
P = Principal
R = Rate of interest per annum compounded annually.
n = Number of years
If the rate is compounded half yearly, the rate is to be taken per six months, and the time will be a multiple of half years.
Similarly, we can modify the rates and time if interest is compounded quarterly, yearly, monthly, etc., or we can use a general formula of compound interest:
A = P(1+r/n)nt, where A = amount, P = principal, r = rate of interest in decimal, t = time in years, n = number of times interest is compounded in a year.
Types of problems
Simple Interest, Compound Interest, and CAT Questions can be divided into:
Questions that involve calculations of Simple Interest
Questions that include calculations of the rate of interest (Principal, time and Simple interest are given).
Questions that involve calculations of time (Principal, Rate of interest and Simple interest are given).
Questions that involve calculations of compound interest, such as if the rate is compounded annually, half-yearly, monthly, or quarterly.
Amount and Principal are given; Time or rate will be asked.
Questions based on the difference between SI and CI.
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Use NowSimple Interest, Compound Interest, CAT Questions From CAT Previous Year Papers
Q.1.
A person invested a total amount of Rs. 15 lakh. A part of it was invested in a fixed deposit earning 6% annual interest, and the remaining amount was invested in two other deposits in the ratio of 2:1, earning yearly interest at the rates of 4% and 3%, respectively. If the total yearly interest income is Rs. 76,000, then the amount (in Rs. lakh) invested in the fixed deposit was [CAT Question Paper 2019, TITA] (Simple interest CAT questions)
9 lakh
10 lakh
9.5 lakh
8 lakh
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Answer: (1) 9 lakh
Solution:
Let's say the amounts invested in two other schemes are 200x and 100x at 4% and 3%, respectively.
So, the Amount invested in a fixed deposit = 1500000 – 300x
Two other schemes are 200x and 100x at 4% and 3%, respectively.
Total annual interest = 6% of (1500000 – 300x) + 4% of 200x + 3% of 100x = 76000
⇒ 90000 – 18x + 8x + 3x = 76000
⇒ x = 2000
Therefore, the amount deposited in a fixed deposit = 1500000 – 600000 = 900000 = 9 lakh
Hence, the correct answer is option (1).
Q2.
Amala, Bina, and Gouri invest money in the ratio of 3: 4: 5 in fixed deposits having respective annual interest rates in the ratio of 6: 5: 4. What is their total interest income (In Rs) After a year, will Bina's interest income exceed Amala's by Rs 250? [CAT Question Paper 2019 slot-1]
6000
7250
6350
7000
Answer: (2) 7250
Solution:
Ratio of interest of Amala, Bina, and Gouri = (3 × 6) : (4 × 5) : (5 × 4) = 9 : 10 : 10
The interest income of Amala, Bina, and Gouri can be taken as 9x, 10x, and 10x, respectively.
Total income = 29x
Difference between interest income of Bina and Amala = 250 = (10x – 9x) = x
Therefore, Total income from interest = 29 × 250 = 7250
Hence, the correct answer is option (2).
Q.3.
A sum was doubled with a 12.5% rate of simple interest per annum. The time taken for that sum to be doubled is:
8 (½) years
8 years
12 years
12 (½) years
Answer: (2) 8 years
Solution:
Let the principal be P.
Sum = 2P
Let the time be T.
Therefore, Simple interest = Amount – Principal = 2P – P = P
We know, Simple interest = (Principal × Rate × Time) / 100
⇒ T = (P × 100) / (P × 12.5)
⇒ T = 1000 / 125
So, T = 8 years
Hence, the correct answer is option (2).
Q.4.
A sum of money becomes 1.331 times in 3 years as compound interest. The rate of interest is:
8%
7.5%
10%
50%
Answer: (3) 10%
Solution:
Assuming the principal is Rs. 1000, the amount will be Rs. 1331.
When compounded annually, A = P×(1 + R/100)T, where A is the total amount, P is the principal amount, R is the rate of interest per annum, and T is the time in years.
So, 1331 = 1000(1 + R/100)3
⇒ 1331/1000 = (1 + R/100)3
⇒(11/10)3=(1 + R/100)3
⇒ 11/10 = 1 + R/100
⇒ R/100 = 1/10
⇒ R = 10%
Hence, the correct answer is option (3).
Q.5.
B borrows Rs. 5000 from A at 6% p.a. simple interest and lends it to C at compound interest of 10% p.a. If B collects the money back from C after 2 years and repays A, the profit made by B in the transaction is ______.
Rs. 1050
Rs. 450
Rs. 600
Rs. 500
Answer: (2) 450
Solution:
At Simple Interest, B borrows from A.
Principal = Rs. 5000
Rate = 6%
Time = 2 years
At Compound Interest, B lends to C.
Principal, P = Rs. 5000
Time, n = 2 years
Rate, R = 10%
We know,
Simple interest = (P× R × T)/100
Total amount = P×(1 + R/100)n
Simple interest = (5000 × 2 × 6)/100 = Rs. 600
Total amount to be paid back to A = 5000 + 600 = Rs. 5600
B lends to C at Compound interest.
Total amount = 5000(1 + 10/100)2 = 5000 × 1.21= Rs. 6050
So, the profit made by B = Rs. 6050 – Rs. 5600 = Rs. 450
Hence, the correct answer is option (2).
What You Must Know Before Solving SI & CI Questions
Fractions and percentages are at their fingertips.
Vedic Maths (Simplification and Approximation)
Ratios
Simple Interest And Compound Interest Tricks For CAT 2025
Use the concept of fractions and percentages in SI and CI
Use the idea of successive change in the problems of Compound Interest.
Difference between SI and CI for two cycles = P(r/100)2.
Difference between SI and CI for three cycles = P(r/100)2 x (3 + r/100).
If a sum of money becomes x times in n years at the simple rate of interest, then the rate is calculated as R = (x - 1) x 100/n
Practice simple interest questions and Compound Interest questions ( discussed in the introduction) separately.
References To Study (Theory) Simple Interest And Compound Interest Concept
Quantitative Aptitude for CAT by NN.K.Sinha
2iim Online Learning Classroom
References To Study (Practice) Simple Interest, Compound Interest, CAT Questions
Arun Sharma: A Quantitative Approach for CAT (6th Edition)
https://insideiim.com/best-resources-cat-exam-preparation
CAT's previous years' papers
Part 2: Logical Reasoning And Data Interpretation
Topic: Blood Relation (LR)
Blood Relation is one of the most essential parts of LR. A blood relationship is defined as any relationship formed by birth or marriage. Here, we will discuss blood relations in Logical Reasoning, including types of blood relations, what blood relations are in logical reasoning, and blood relation questions in logical reasoning. Let us start with the kinds of blood relations:
Birth Relations (paternal or maternal): Mother, Father, Son, Daughter, Brother, Siste, etc.
Paternal: Relations from the father's side.
Maternal: Relations from the mother's side.
Relations from a marriage: Mother-in-law, father-in-law, sister-in-law, etc.
Types Of Blood Relation CAT 2025 Questions:
Direct Questions/Single Statement Based: The Relationship between two persons is given indirectly, and you have to find the correct relationship.
Puzzled Relation: A set of information is given about the relations, professions, place, etc. Using that information, answers have to be determined.
Coded Blood Relation: Relationships are presented in the form of codes. For example, A @B means A is the father of B. A#B means B is the father of A, etc.
Relationships of mixed blood: These involve relations between two or more families.
Tips for CAT 2025 Blood Relations Questions
Family Tree: Forefathers and mothers serve as the roots of the tree, followed by their children, who form the stems of the tree, and then their grandchildren. It is a visual representation of a family, and the most helpful trick for solving questions of Blood Relation.
Backtracking: For questions of the single-statement type, draw a family tree using the latest information first.
Elimination of the Wrong option: Most effective in the questions of coded Blood Relation. By using the generation gap and gender identification, wrong choices can be eliminated. The gender of a person cannot be determined by their name. A specific notation should be used to distinguish between females and males when drawing a family tree. Members of the same generation should not determine a person's gender. That Can Help You Learn: (Based on the CAT Exam)
Direction (Q1- Q2)
In a family, there are seven members- A, B, C, D, E, F, and G. A and B are a married couple, and A is a male member. D is the only son of C's brother. D is the brother of E and F. G is the head of the family, whose wife died long ago. G has two sons, one of whom never got married. There are only three generations in the family.
Q.1.
How is F related to A?
Mother
Sister-in-law
Sister
Daughter
None of these
Ans: (4) Daughter
Q.2.
Who is an unmarried member of the second generation?
C
G
H
Cannot be determined
None of these
Ans: (1) C
Solution:
G (male, since he had a wife who died long ago) is the head of the family and has two sons.
A, who is the brother of C (since D is the son of A and D is the brother of E and F), the only possibility of G's sons is A and C, is married to B and has a son D.
So, A and C must be in the second generation.
Therefore, D must be the son of A. Also, E and F are sisters of D, and A must be the father of E and F.
C is unmarried since he is the brother of A (G has two sons, and A is the brother of C)
Q.3.
Read the following instructions:
P$Q means Q is the brother of P;
P * Q means Q is the mother of P;
P x Q means P is the son of Q.
If the code of a family is A *B$CC x D, who is the father among them?
D
B
C
A
Answer: (1) D
Solution:
A * B means B is the mother of A, and hence B is the mother in the family.
B$C means C is the brother of B.
C x D indicates C is the son of D, and hence D is the father in the family.
D is the father of B and C, and B is the mother of A.
Hence, option 1 is correct.
D
B
C
A
Answer: (1) D
Solution:
A # B means B is the mother of A, and hence B is the mother in the family.B$CC means C is the brother of B.
C x D indicates C is the son of D, and hence D is the father in the family.y
D is the father of B and C, and B is the mother of A.
Hence, option 1 is correct.
Prerequisite Before Solving Blood Relation Questions
To prepare for Blood relations, students must know of:
Basic family relations
Generation gaps
Relations of in-laws
Basic knowledge of coding
References to Study (Theory):
LRDI for CAT and GMAT by Nishit K. Sinha, www.catking.in (Web as well as YouTube Channel)
References to Study (Practice):
Verbal and Non-Verbal Reasoning by R. S. Aggarwal.
CAT's previous years' papers
Part 3: VARC (Grammar tenses for CAT 2025 Exam)
Topic: Tenses Part-1 ( Present Tenses)
Tenses are of three types: present tense, past tense, and future tense.
Tenses are the most common area of error in the English language. Therefore, we must prepare our tenses well.
Here, we will discuss the tense in English grammar, including exercises, examples, and worksheets for the present tense. Three easy steps to solve the problems that involve errors in the present tense:
Learn the most common errors
Spot the errors
Correct the errors
Present Tense:
The present tense describes an action that is happening in the present time. The present tense can further be divided into four categories to indicate the action as follows:
Simple Present Tense/ Present Indefinite Tenses: denotes continuous action.
Example: Ganesh sits on this chair.
Present Perfect Tense: denotes an action that has been completed.
Example: Rohit has gone to school.
Present Continuous Tense: denotes an action that is happening in the present time.
Example: Seema is drinking tea.
Present Perfect Continuous Tense: denotes an action that occurs throughout a period.
Example: Seema has been going to school.
Questions On Present Tense From CAT Previous Year Papers
Q.1.
Prem Chand ……… novels that are appealing to people of all ages.
Wrote
Had written
Had been writing
Has written
Answer: (4) Has written
Explanation: The work is done, but its effect is still present as people still appreciate his novels.
Q.2.
Roji, I ……… haven't seen you for a long time, how ………?
Had not, are you
Have not, have you been
Did not, had you been
Have not, have you been
Answer: (2) Have not, have you been
Explanation: Not seeing Roj is the action that has been completed in the present time.
Q.3.
She ……… theatre dramas. ……… any recent play?
Loves watching, have you watched?
Love watching, did you watch
Is loving, have you been watching
Loves watching, have you seen
Answer: (1) Loves watching, have you watched
Explanation: 'Watching dramas' is a continuous action in the present time
With the present indefinite, the past perfect cannot be used. So, (4) is wrong and (1) is correct.
Q.4.
Naina and Palak ……… to our house to play the indoor games with us.
Will have been coming
Had been to come
Are coming
Come
Answer: (3) Are Coming
Explanation: 'Are coming' is the correct answer as it describes the expected event in the near future.
Prerequisite:
Basic knowledge of verbs and helping verbs.
Basic understanding of parts of speech.
Tips For Error Correction In Present Tenses:
Learn the rules of all types of present tenses.
Read newspaper articles.
Practice error-based questions on tenses.
Attempt Mock-Tests.
References to Study (Theory):
How to Prepare for Verbal Ability & Reading Comprehension for CAT by Meenakshi Upadhyay and Arun Sharma (9th Edition)
Learn English with Rebecca · engVid (YouTube Channel)
Preply.com (Web)
References to Study (Practice):
engvid.com (Web)
Oxford Practice Grammar (sixth edition)
Practice on sample question papers.
Free PDFs for CAT 2025 preparation
Frequently Asked Questions (FAQs)
Q: Are the previous year's CAT papers enough for practice?
A:
Previous year papers are essential but not sufficient alone. Combine them with good preparation books, such as Arun Sharma for Quant, and practice from multiple sources. Previous papers help understand patterns, but additional practice builds speed and accuracy.
Q: How to solve blood relation problems in CAT?
A:
There are many approaches we can take to solve blood relation problems, these are:
Family Tree: Forefathers and mothers serve as the roots of the tree, followed by their children forming the stems of the tree and then grandchildren. It is a visual representation of a family and the most helpful trick to solve the questions of blood relation
Back-tracking: In the questions of the type of single statement, draw a family tree using the last information first.
Elimination of the Wrong option: Most effective in the questions of coded blood relation. By using the generation gap and gender identification, wrong options can be eliminated. The gender of a person cannot be determined by their name. A specific notation should be used for females and males while drawing the family tree. Members of the same generation should be represented at the same level.
Q: What are the 4 types of present tense?
A:
The present tense can be divided into four categories: simple present or present indefinite, present continuous, present perfect, and present perfect continuous.
Q: What are the most scoring topics in CAT 2025 Quantitative Aptitude?
A:
Arithmetic (SI/CI, Profit and Loss, Percentages), Number Systems, and Geometry are typically high-scoring subjects. These topics have straightforward concepts and appear frequently. Master the basics and practice various question types from these areas.
Q: What is the formula for simple interest and compound interest for CAT?
A:
The formula for simple interest, SI = (P × R × T) / 100
Where, P = Principal Sum, R = rate of interest at which sum is borrowed or lent, and T = time period (the duration for which money is borrowed or deposited).
The formula for compound interest, A = P×(1 + R/100)^n
Where, A = Amount, P = Principal, R = Rate of interest per annum compounded annually, and n = Number of years.
Q: Is it better to earn simple or compound interest?
A:
If you are lending money to someone then compound interest is better as it can give more earnings, but if you are borrowing money from someone then simple interest is better as you have to pay less in interest..
Q: What is the Blood Relation in logical reasoning?
A:
Blood relation in logical reasoning involves finding relationships between individuals based on given information. These questions test your ability to analyse and deduce relationships like parent, sibling, grandparent, cousin etc.
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Directions for question :
M/s Deloitte Touche Tohmatsu Limited, one of the top four audit and accounting firms in the world with headquarters at London, UK, and with an operational presence in 153 countries, hires Management Trainees (MT) from all the premier management institutes of India thrice every year, in the months of January, May and September.
Each new group of Management Trainees (MT) have to go through a four month rigorous training schedule, after which they have to pass through a test consisting of a written assessment and a case-analysis. The top hundred ranked Management Trainees (MT) based on the performance in the test are confirmed as Management Executives (ME). The rest are given the opportunity of undergoing the training for four months one more time along with the next batch of Management Trainees (MT) and then passing through the subsequent test consisting of the written assessment and case-analysis. The Management Trainee (MT) who fails to get confirmed as a Management Executive (ME) the second time is fired.
The scatter-graph below depicts the number of Management Trainees (MT) at Deloitte taking the tests from January 2020 till May 2022, and the vis-à-vis hired Management Trainees (MT) at Deloitte who were fired :
It is also known that for the month of September 2019 at Deloitte, 96 hired Management Trainees (MT) failed to be confirmed as a Management Executive (ME) the first time, and that 36 hired Management Trainees (MT) were fired.
Question :
In which test did the minimum number of Management Trainees (MT) get confirmed as a Management Executive (ME) in the second attempt ?
Option: 1
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Option: 2
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Option: 3
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Option: 4
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Directions for question:
The bar-graph given below shows the foreign exchange reserves of Nepal (in million Rupees) from 2014 to 2021. Answer the following questions based on the graph :
Question:
What was the percentage increase (rounded to the nearest integer, if deemed necessary) in the foreign exchange reserves in 2020 over 2016 ?
Option: 1 None
Option: 2 None
Option: 3 None
Option: 4 None
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