Tricks and Important Questions on Compound Interest for Teaching Exams

By Karishma Singh|Updated : October 13th, 2022

The numerical ability section is considered to be one of the toughest subjects of Teaching Exams but it can be scored well if prepared well. Compound Interest is one of the toughest chapters which leaves candidates a bit confused and most of the aspirants leave these questions untouched. It is thus important to check detailed Computer interest study notes. Check here for the best Maths study notes and material for compound interest.

It is important to understand each topic of Maths to prepare for the upcoming CTET Exam. To make the chapter easy for you all, we are providing you with 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 the first unit of times becomes the principal for the second unit the amount after the second unit becomes the principal for the third unit and so on.

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

Solve CTET & TET Mock Test 2022 to Boost Your Preparation

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

Important Facts & Formulas on Compound Interest

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

Solution: 

Amount = Rs.

Important Facts & Formulas on Compound Interest

= Rs.

Important Facts & Formulas on Compound Interest

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.

From the above we get

Important Facts & Formulas on Compound Interest

 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

Important Facts & Formulas on Compound Interest

= 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,

Important Facts & Formulas on Compound Interest

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.

Important Facts & Formulas on Compound Interest

= Rs.17576

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

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

Important Facts & Formulas on Compound Interest    

or

Important Facts & Formulas on Compound Interest

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

Amount =

Important Facts & Formulas on Compound Interest

Example:

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

Solutions:

C.I. when interest is compounded yearly

= Rs.

Important Facts & Formulas on Compound Interest

Important Facts & Formulas on Compound Interest

= Rs.5304

C.I. when interest is compounded half-yearly

Important Facts & Formulas on Compound Interest

Important Facts & Formulas on Compound Interest

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

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

Present Worth =

Important Facts & Formulas on Compound Interest

Example:

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

Solution:

Principle = Rs.

Important Facts & Formulas on Compound Interest

Check the Best CTET Preparation Tips here

byjusexamprep

Comments

write a comment

Follow us for latest updates