# Quant Booster on Compound Interest for Teaching Exams

By Ashish Kumar|Updated : April 13th, 2017

Numerical ability section is considered to be one of the toughest subjects of Teaching Exams but it can be scored off well if prepared well. Compound Interest is one of the toughest chapter which leaves candidates a bit confused and most of the aspirants leave these questions untouched.

To make the chapter easy for you all, we are providing you all some Important Short Tricks to solve Compound Interest Questions which will surely make the chapter easy for you all.

## Important Short Tricks to solve Compound Interest Questions

Compound Interest :- Sometimes it so happens that the borrower and the lender agree to fix up a certain unit of time, say yearly or half-yearly or quarterly to settle the precious account.

In such cases, the amount after first unit of times becomes the principal for the second unit the amount after second unit becomes the principle for the third unit and so on.

After a specified period, the difference between the amount and the money borrowed is called theCompound Interest (abbreviated as C.I.) for that period.

### Important Facts & Formulas on Compound Interest

Case 1: Let principle = P, time = n years and rate = r% per annum and let A be the total amount at the end of n years, then

Example: Albert invested an amount of Rs.8000 in a fixed deposit scheme for 2 years at compound interest rate 5 p.c.p.a. how much amount will Albert get on maturity of the fixed deposit.

Solution:

Amount = Rs.

= Rs.

Case 2: When compound interest is reckoned half-yearly.

If the annual rate is r% per annum and is to be calculated for n years, then in this case, rate = (n/2%) half-yearly and time = (2n) half-yearly.

Form the above we get

Example: Sam investment Rs.15,000 @ 10% per annum for one year. If the interest is compounded half-yearly, then the amount received by Sam at the end of the year will be.

Solution:

P = Rs. 15000; R = 10% p.a = 5% half-year, T = 1 year = 2 half year

Amount = Rs

= Rs.16537.50

Case 3: When compound interest is reckoned quarterly.

In this case, rate = (r/4%) quarterly and time = (4n) quarter years.

As before,

Example:

Find the compound interest on Rs. 15,625 for 9 months at 16% per annum compounded quarterly.

Solution:

P = Rs. 15625, n= 9 months = 3 quarters, R = 16% p.a. = 4% per quarter.

Amount = Rs.

= Rs.17576

C.I = Rs. (17576 – 15625 ) = Rs. 1951.

Note: The difference between the compound interest and the simple interest over two years is given by

or

Case 4: When interest is compounded annually but time is in fraction, say  years.

Amount =

Example:

What is the difference between the compound interest on Rs. 5000 for  at 4% per annum compounded yearly and half-yearly?

Solutions:

C.I. when interest is compounded yearly

= Rs.

= Rs.5304

C.I. when interest is compounded half-yearly

Difference = Rs.(5306.04 – 5304 ) = Rs.2.04.

Case 5: Present worth of Rs.x due n years hence is given by:

Present Worth =

Example:

The principle that amounts to Rs.4913 in 3 years at  per annum compound interest compounded annually, is :

Solution:

Principle = Rs.

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Raghunath SinghApr 24, 2017

Good job

Y.krishna KumariJul 18, 2017

All these cases how to put the values r and n plz reply me

Pragya RaiSep 3, 2017

Sir if there is any problem with the case 4 example... i think the time is not mentioned.. OR correct me of the question come like this only

Navi SainiNov 13, 2017

Thanks sir

Babloo BishtJan 19, 2018

Wrong sawal laggta h aap ko khud reviwe karne ki jarurat h

Vandana PachauriJul 16, 2018

Sir, If u will provide it in pdf form then  it will becomes more useful.

Sanjay SarojNov 25, 2019

Thanks sir

Arzu AraNov 27, 2019

Thanks a lottt maam....God bless u ...love u

ShrutiAug 25, 2021

Can anyone plz tell me that in case 3 their is a example. In that example their is 26/20. Can anyone plz tell me that how it become..

Lata LataMar 8, 2022

thanks
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