Aptitude (Compound Interest Tutorials & Tricks)

Compound Interest Tutorials & Tricks

Introduction

If P is Principal amount, R is Percentage Rate, n is number of years

Formula for finding out Compound Interest.

Rule 1: When interest is compound annually Amount = P(a+(R/100))n

Rule 2: If interest is compouned Half-yearly : Amount = P(1+((R/2)/100))2n

Rule 3: When interest is compounded Quarterly :Amount = P(1+((R/4)/100))4n

Rule 4: When rate of interest are X % , Y %, Z % for 1st, 2nd and third year respectively. Then amount will be : Amount = P(1+(x/100))(1+(y/100))(1+(z/100))

Rule 5: When interest is compounded annually but time is in fraction such as 5(2/3)years Amount = P(1+(R/100))5*(1+((2/3)R/100))

Sample Example

Ex

A sum of money doules itself at compound interest in 15 years. In how many years will it become eight times ?

A

 P(1+(R/100))15, Also P(1+(R/100))n = *P or (1+(R/100))n = {(1+(R/100))15*3}, so number of years = 45

Ex

The difference between compound interest and simple interest on an amount of Rs. 15, 000 for 2 years is Rs. 96. What is the rate of interest per annum ?

A

 [[1500*(1+(R/100))2] - [(15000*R*2)/100]=96] 15000[(1+(R/100))2 - 1 - 2R/100] = 96, R2 = (9