BUSINESS MATHEMATICS FINAL EXAM

BUSINESS MATHEMATICS FINAL EXAM

SIMPLE INTEREST (1–10)

1. Simple interest on $1200 at 6% for 2 years is:
A. $120
B. $144
C. $160
D. $180
Answer: B
RATIONALE: SI = PRT = 1200 × 0.06 × 2 = 144.



2. If rate increases, simple interest will:
A. Decrease
B. Remain constant
C. Increase
D. Become zero
Answer: C
RATIONALE: SIMPLE INTEREST IS DIRECTLY PROPORTIONAL TO RATE.



3. Simple interest depends on:
A. Principal only
B. Time only
C. Principal, rate, time
D. Profit only
Answer: C
RATIONALE: SI IS BASED ON ALL THREE VARIABLES P, R, AND T.



4. If time is zero, interest is:
A. Principal
B. Rate
C. Zero
D. Negative
Answer: C
RATIONALE: NO TIME MEANS NO INTEREST ACCRUES.



5. Formula for simple interest is:
A. P + R + T
B. PRT/100
C. P/R
D. PT

,Answer: B
RATIONALE: STANDARD SIMPLE INTEREST FORMULA IS PRT/100.



6. Doubling principal results in:
A. No change
B. Double interest
C. Half interest
D. Zero interest
Answer: B
RATIONALE: INTEREST IS DIRECTLY PROPORTIONAL TO PRINCIPAL.



7. Simple interest is a:
A. Compound function
B. Linear function
C. Logarithmic function
D. Random function
Answer: B
RATIONALE: SIMPLE INTEREST GROWS LINEARLY OVER TIME.



8. If rate is 10% and principal is 1000 for 1 year, interest is:
A. 50
B. 100
C. 150
D. 200
Answer: B
RATIONALE: 1000 × 0.10 × 1 = 100.



9. Interest increases when:
A. Principal decreases
B. Time decreases
C. Any factor increases
D. Rate is zero
Answer: C
RATIONALE: SI INCREASES WITH ANY INCREASE IN P, R, OR T.



10. Unit of rate is:
A. Dollar
B. Percent
C. Kilogram
D. Liter
Answer: B
RATIONALE: INTEREST RATE IS EXPRESSED IN PERCENTAGE.

, COMPOUND INTEREST (11–20)

11. Compound interest is calculated on:
A. Principal only
B. Interest only
C. Principal + accumulated interest
D. Discount
Answer: C
RATIONALE: CI INCLUDES INTEREST ON PREVIOUS INTEREST.



12. Compounding annually means:
A. Twice a year
B. Monthly
C. Once per year
D. Daily
Answer: C
RATIONALE: ANNUAL COMPOUNDING OCCURS ONCE PER YEAR.



13. Compound interest grows faster than simple interest because:
A. Lower rate
B. Interest on interest
C. No time factor
D. Fixed value
Answer: B
RATIONALE: CI ACCUMULATES INTEREST OVER TIME.



14. Formula for compound amount is:
A. PRT
B. P(1 + r)^t
C. P + R + T
D. P/R
Answer: B
RATIONALE: COMPOUND AMOUNT USES EXPONENTIAL FORMULA.



15. If interest is compounded more frequently, amount will:
A. Decrease
B. Increase
C. Stay same
D. Become zero
Answer: B
RATIONALE: MORE COMPOUNDING PERIODS INCREASE TOTAL INTEREST.