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Simple and Compound Interest Tricks

1) This document provides formulas and examples to solve simple and compound interest problems. It explains tricks for common types of simple and compound interest questions that appear in exams. 2) Key formulas are presented to calculate interest rate when time is given, time when rate is given, and for splitting a principal amount between time periods with different interest rates. 3) The difference between simple and compound interest formulas are explained for annual, half-yearly, and quarterly compounding. Step-by-step solutions are given for sample questions.

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Bhavani U
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348 views5 pages

Simple and Compound Interest Tricks

1) This document provides formulas and examples to solve simple and compound interest problems. It explains tricks for common types of simple and compound interest questions that appear in exams. 2) Key formulas are presented to calculate interest rate when time is given, time when rate is given, and for splitting a principal amount between time periods with different interest rates. 3) The difference between simple and compound interest formulas are explained for annual, half-yearly, and quarterly compounding. Step-by-step solutions are given for sample questions.

Uploaded by

Bhavani U
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Simple and Compound Interest Tricks – 2


governmentadda.com/simple-and-compound-interest-tricks-2/

August 28,
2019

Read this post carefully and note down all the formulas in a piece of paper for quick
revision.

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Q. 1) If a sum of money becomes 3 times itself in 20 years at simple interest. What


is the rate of interest?
In such questions apply the direct formula-
Rate of interest = [100*(Multiple factor – 1)]/T
So R = 100*(3 – 1)/20
Answer : 10%
Note : With this formula you can find Rate if Time is given and Time if rate is given.

Q. 2)

1/5
In such questions, just write this line :
1st part : 2nd part : 3rd part = 1/(100+T1 * r) : 1/(100+T2 * r) : 1/(100+T3 * r)
= 1/(100+2 * 5) : 1/(100+3 * 5) : 1/(100+4*5)
= 1/110 : 1/115 : 1/120
= 23*24 : 22*24 : 23*22
Hence 1st part = (23*24)/ (23*24 + 22*24 + 23*22) * 2379
Answer : 828
Note : Surprisingly, such questions when asked mostly have this same data, i.e., R=5%
and T1, T2, T3 = 2, 3, 4 years, respectively. Only the Principal is changed. So it would be
wise if you can just mug this line :
1st part : 2nd part : 3rd part = 23*24 : 22*24 : 23*22
Based on the above line, you would be able to solve such questions in a jiffy.
But note that it will only work if the question is on Simple Interest. Like the below
question appeared in SSC CGL Tier 2-

Q. 4
Here the data is same. i.e., R=5% and
T1, T2, T3 = 2, 3, 4 years, respectively.
So we will write directly –
1st part : 2nd part : 3rd part = 23*24 :
22*24 : 23*22
A received = (23*24)/ (23*24 +
22*24 + 23*22) * 7930
Answer : Rs. 2760

Q. 5) If a certain sum of money P lent out for a certain time T amounts to P1 at R1% per
annum and to P 2 at R2% per annum, then

The above formula is for calculating the Time, if


the question asks the rate, then just interchange
the rate and time. Hence the formula will
become
R = (P1 – P2)*100/P2T1 – P1T2

Apply the formula:


R = (650-600)*100/600*6 – 650*4
R = 5%

Alternative Method :

You can solve such questions quickly without mugging the above formula. How?
The sum amounts to Rs. 600 in 4 years and Rs. 650 in 6 years. This means the simple
interest is Rs. 50 for 2 years (because the amount increased from Rs. 600 to Rs. 650 in 2
years)
2/5
So the SI for 4 years is Rs. 100 (we have seen earlier than SI is proportional. So if SI = 100
for 2 years, then SI = 150 for 3 years, SI = 250 for 5 years and so on)
Now SI = Rs. 100; P = 600-100 = Rs. 500; t = 4 years
R = 100*SI/(P*t) = 10000/2000
Answer: 5%
For CI, the formula is different

Difference between CI and SI


This topic is very important from examination point of view. Note the following things-
If t=1 year, then SI = CI
If t=2 years then difference between CI and SI can be given by two formulas-

If t=3 years then difference between CI and SI can be given by two


formulas-
In all the above formulas we have assumed that the interest is
compounded annually
Let us solve some CGL questions
Q. 6
A = P(1+r/100)^t
Given, A=1.44P t = 2 years
1.44P = P(1 + r/100)^2

r = 20%
Answer : (D)
Q. 7
Here the interest is compounded half yearly, so the
formulas we mugged earlier are of no
use here. We will have to solve this
question manually
SI = P*10*1.5/100 = 0.15P
CI = P(1 + 5/100)^3 – P = P(1.05^3 – 1)
Given CI – SI = 244
P(1.05^3 – 1) – 0.15P = 244
P = Rs. 32000

Answer : (C)
Q. 8
Time = 2 years
3/5
Hence apply the formula: Difference(D) = R*SI/200
CI – SI = R*SI/200
CI – SI = (12.5/200)*SI
510 = 1.0625*SI [Since CI = Rs. 510]
SI = Rs. 480
Answer : (D)
Q. 9
CI for 1st year = 10% of 1800 = Rs. 180
CI for 2nd years = 180 + 10% of 180 =
Rs. 198
Total = 180+198 = Rs. 378
Hence time = 2 years
Or you can apply the formula
A = P(1+r/100)^t

Answer : (B)
Q. 10
2.5 = P*R*2/100 – P*r*2/100
2.5 = 10R – 10r
R – r = 0.25
Answer : (D)
Q. 11
CI for 1st year = 5% of P = 0.05P
CI for 2nd year = 5% of P + 5% of (5% of
P) = 0.05P + 0.0025P = 0.0525P
Total CI = 0.05P + 0.0525P = 0.1025P

Given, 0.1025P = 328


P = Rs. 3200
Answer : (C)
Note : You can solve this question by the
formula A = P(1+r/100)^t as well
Q. 12
Note that in this question the CI for 2
years in not given, but the CI for the
2nd year is given.
CI for 2nd year = 10% of P + 10% of
(10% of P) = 0.1P + 0.01P = 0.11P
Given, 0.11P = 132
P = Rs. 1200
Answer : (D)
Q. 13
Interest = Re. 1 per day = Rs. 365 for 1 year
SI = P*r*t/100
t=1, r=5%, SI = Rs. 365
4/5
So, P = 365*100/5 = Rs. 7300
Answer : (A)
Q. 14

We know
Difference = P(r/100)^2(r/100 + 3)
P = Rs. 10000, r = 5%, t = 3 years
Hence D = Rs. 76.25
Answer : (C)
Q. 15

We know, R = [(y/x)^(1/T2 – T1) – 1]*100


= [(1587/1200)^1/(3 – 1) – 1]*100
= [(1587/1200)^1/2 – 1]*100

= 3/20 * 100
= 15%

Answer : (B)
So this is the end of CI and SI series. If you have any doubt in this topic, please drop
a comment…

5/5

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