Important Short Tricks to Solve Compound Interest Questions

By Sandeep Baliyan|Updated : April 11th, 2017

The numerical ability section is considered to be one of the toughest subjects of SSC Exams but it can be scored off 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.

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 the Compound 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

Important Facts & Formulas on Compound Interest

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.

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.

Form 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 the compound interest and the 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 fraction, say  years.

Amount =

Important Facts & Formulas on Compound Interest

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.

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

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Posted by:

Sandeep BaliyanSandeep BaliyanMember since Oct 2015
Currently working as a Senior Community Manager at Gradeup. He has been a Professional Educator with diverse experience of more than 6 years in the E-learning industry. He has worked in Bankersadda as a content manager and build the foundation of SSC Adda also. He has been a pioneer in providing excellent study material to the students. He has cracked many government exams like SSC, NDA and various police departmental exams. His email address is sandeep@gradeup.co.
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Mix And Match
How 9 monts is 3 quarter plz someone explain....im nt able to understand
Priya Agrawal
Case number 4  I am not able to understand. ...please explain
Shivani Kanojiya
Sir... Case 4 & 5 k solutions smjh ni aa rhe. Can u plz explain ?
Vilvin

VilvinJun 12, 2019

How do you get interest rate?
Himanshu Singh
In case 5, rate is taken 25/4 .How? Please explain.
Gayathri

GayathriDec 9, 2019

Can someone explain the case 4 example .
Apachy Night

Apachy NightDec 11, 2019

Dear Sir, Its not trick, This is traditional way to solve this question.
Subrat Kumar Sahoo
case 4&5 question is incomplete
Prudhvi Goenka
case 4 rate 25/4...??? how..

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SSC & Railway

CGLSSC GDDFCCILCHSLCPONTPCMTSStenoGroup DOthersCoursesMock Test
tags :SSC & RailwayQuantitative AptitudeSSC CGL OverviewSSC CGL Exam DatesSSC CGL Apply OnlineSSC CGL Eligibility CriteriaSSC CGL Job Profile

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