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Compound Interest PDF

This document provides an introduction and approach to solving compound interest questions that commonly appear on exams like IBPS PO, IBPS Clerk, and IBPS SO. It explains that compound interest questions typically focus on 2-3 year timeframes and provides a "slab method" to solve them. The method involves breaking the time period into slabs (years) and calculating interest on the principal and accumulated interest for each slab. The document then provides 25 sample questions applying this approach and technique.

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Selvaraj Villy
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© © All Rights Reserved
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Download as PDF, TXT or read online on Scribd
398 views

Compound Interest PDF

This document provides an introduction and approach to solving compound interest questions that commonly appear on exams like IBPS PO, IBPS Clerk, and IBPS SO. It explains that compound interest questions typically focus on 2-3 year timeframes and provides a "slab method" to solve them. The method involves breaking the time period into slabs (years) and calculating interest on the principal and accumulated interest for each slab. The document then provides 25 sample questions applying this approach and technique.

Uploaded by

Selvaraj Villy
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 18

Page 1 of 18

Preface
The Digi-notes (Compound Interest) as presented here is prepared
strictly according to IBPS-PO, IBPS-Clerk, IBPS-SO and other
PO/Clerk level competitive exams. The main aim of the Digi-notes is to
develop the notion of the Compound Interest so that candidate would be
able to handle the quantitative problems easily and conveniently in their
competitive exams. Candidates are advised to handle the Digi-notes by
keeping in mind that they are going to LEARN (NOT STUDY) the
Compound Interest so that you; yourself would be able to minimize the
steps required to conclude the answer of the question and hence develop
the SHORT TRICKS.

All the best

Page 2 of 18

Contents
Page No.
1.
2.
3.
4.
5.

Preface..2
Contents..3
Introduction..4
Approach for Compound Interest Questions...............................4
Questions...7

Page 3 of 18

Introduction:
Likewise as in simple interest; in compound interest also we will use the
formulae rarely. The compound interest formulae are too costly to use in
terms of time and calculation. We will learn in the coming section that
how to use; again; the percentage tool to solve the compound interest
questions in nearly 90% of the questions.

Approach for Compound Interest Questions:

In IBPS PO, IBPS Clerk, IBPS SO and other competitive examinations;


if the examiner asks directly the question to find the compound interest
or simple interest or their difference; they are mainly focussing on 2
years time and 3 years time. In rare case; only 2 to 3 times; the
Page 4 of 18

question related to 4 years time is asked; and thats too easy. So our
main focus will be on 2 years question and 3 years question.
Next we are going to discuss the SLAB METHOD approach for
cracking the verities of questions related to compound interest. If P is the
principle and r% is the rate of interest:

1. For 2 year:
Short Trick:
I
II

r
100
r
P
100

r
r

100 100

Type equation here.

Learn the following properties:

2. For 3 year:
r
100
r
II P
100
r
III P
100
I

r
r

100 100
r
r
P

100 100

r
r

100 100

r
r
r

100 100 100

Page 5 of 18

Learn the following properties:

Page 6 of 18

Questions:
Now we are equipped enough to solve the following questions:

Q.1: Find the compound interest on Rs.58800 at % pa after 2


years; compounded annually.

Sol:

I
Rs.8400
II
Rs.8400
Rs.1200
CI 2 Rs.8400 Rs.1200 Rs.18000

Q.2: Find the compound interest on Rs.32400 at % pa after 3


years; compounded annually.

Sol:

2
3

16 %

1
6

I
Rs.5400
II Rs.5400 Rs.900
III Rs.5400 Rs.900
Rs.900 Rs.150
CI 3 Rs.5400 3 Rs.900 Rs.150 Rs.19050

Q.3: Find the difference between the compound interest and the
simple interest at 5% pa on Rs.1842 after 2 years; compounded
annually.
Page 7 of 18

Sol:

I
Rs.92.10
II
Rs.92.10
CI SI Rs.4.605

Rs.4.605

Q.4: Find the difference between the compound interest and the

simple interest at % pa on Rs.1280 after 3 years; compounded


annually.
Sol: 12 12 % 18
I
II
III
CI SI

Rs.160
Rs.160 Rs.20
Rs.160 Rs.20
Rs.20 Rs.2.5
3 Rs.20 Rs.2.5 Rs.62.50

Q.5: The simple interest on a certain sum of money at 3% pa after 2


years is Rs.80. Find the compound interest on the same sum of
money at the same rate after 2 years.

Sol:

I
Rs.40
II
Rs.40
CI Rs.81.20

Rs.1.2

Page 8 of 18

Q.6: The simple interest on a certain sum of money at 5% pa after 3


years is Rs.150. Find the difference between the compound interest
and the simple interest on the same sum of money at the same rate
after 3 years.
Sol:
I
II
III
CI SI

Rs.50
Rs.50 Rs.2.5
Rs.50 Rs.2.5
Rs.2.5 Rs.0.125
3 Rs.2.5 Rs.0.125 Rs.7.625

Q.7: The simple interest on a certain sum of money at a certain rate


of interest after 2 years is Rs.84 and the compound interest on the
same sum of money at the same rate after 2 years is Rs.86.10. Find
the rate of the interest per annum and the principle.

Sol:
I
II

Rs.42
Rs.42
Rs.2.1
r
Now
42
Rs.2.1
100
r 5% p.a.
100
And P 42
Rs.840
5

Q.8: The difference between the compound interest and the simple
interest on a certain sum of money at 5% pa after 2 years is Rs.1.50.
Find:
1. The Principle
Page 9 of 18

2. The Simple Interest


3. The compound Interest

Sol:
P Rs.600
I
Rs.30
II
Rs.30

Rs.1.50

SI Rs .60
CI Rs .61.50

Q.9: The compound interest on a certain sum of money at 20% pa


after 2 years is Rs.243.10. Find the simple interest on the same sum
of money at the same rate after 2 years.
Sol:Let P 25% Square (
1

2 years) of Denominator of 20% 5


P 25%
I
5%
II
5%
SI

1%

Rs.243.10
10% Rs.221
11%

Q.10: The compound interest on a certain sum of money at %


pa after 2 years is Rs.585.26. Find
1. Principle
Page 10 of 18

2. The simple interest on the same sum of money at the same rate
after 2 years.
Sol:Let P 36% Square (
2

2 years) of Denominator of 16 3 % 6

P 36%
I
6%
II
6%

1%

Rs.585.26
36% Rs.1620.72
13%
Rs.585.26
2 SI
12% Rs.540.24
13%

1 P

Q.11: The difference between the compound interest and the simple

interest on a certain sum of money at % pa after 3 years is


Rs.350. Find the difference between the compound interest and the
simple interest on the same sum of money at the same rate after 2
years?
Sol:

Let P 729% Cube (


1

3 years) of Denominator of 11 9 %

P 729%
I
81%
II 81%
III 81%
CI SI 2 years

9%
9%

9%

1
9

1%

Rs.350
9% Rs.112.50
28%

Page 11 of 18

Q.12: The compound interest of the third year on a certain sum of

money at % pa is Rs.7680. Find the compound interest on the


same sum of money at the same rate after 2 years.
Sol:Let P 343% Cube (
2

3 years) of Denominator of 14 7 % 7

P 343%
I
49%
II 49%
III 49%
CI After 2 years

7%
7%

7%

1%

Rs.7680
105% Rs.12600
64%

Q.13: The difference between the compound interest of the third


year and the compound interest of the second year on a certain sum

of money at % pa is Rs.98. Find the sum.


Sol:Let P 216% Cube (
2

3 years) of Denominator of 16 3 % 6

P 216%
I
36%
II 36%
III 36%
P

6%
6%

6%

1%

Rs.98
216% Rs.3024
7%

Page 12 of 18

Q.14: The respective ratio of the difference between the compound


interest and the simple interest on a certain sum of money after 3
years and the difference between the compound interest and the
simple interest on the same sum after 2 years is 25:8. Find the rate
of the interest.
Sol:
I
II
III

8
8

r
1
100
1
r 12 % pa
2

Q.15: Find the compound interest on Rs.8000 after 2 years; the


rate of the interest being 4% pa for the first years and 6% pa for the
second year.
Rs.8000
4% I
Rs.320
6% II
Rs.480
Rs.19.20
CI Rs.320 Rs.480 Rs.19.20 Rs.819.20

Page 13 of 18

Q.16: Find the compound interest on Rs.10000 after 3 years; the


rate of the interest being 4% pa for the first years; 5% pa for the
second years and 6% pa for the third year.

Short Trick:
Rs.10000
4% I
Rs.400
5% II Rs.500 Rs.20
6% III Rs.600 Rs.24
Rs.30 Rs.1.20
CI SI Rs.400 Rs.500 Rs.600 Rs.20 Rs.24 Rs.30 Rs.1.20 Rs.1575.20

Q.17: Find the compound interest on Rs.5000 at 20% pa after


years; the interest being compounded annually.

Short Trick:
Rs.5000
20% Y
10% HY
CI Rs.1600

Rs.1000
Rs.500

Rs.100

Q.18: Find the compound interest on Rs.5000 at 20% after


years; the interest being compounded half yearly.

Short Trick:
Rs.5000
10% HY1

Rs.500

10% HY2

Rs.500

Rs.50

10% HY3

Rs.500

Rs.50

Rs.50

Rs.5

CI Rs.1650

Page 14 of 18

Q.19: Find the compound interest on Rs.5000 at 20% after


years; the interest being compounded half yearly.

Short Trick:
Rs.5000
10% HY1

Rs.500

10% HY2

Rs.500

1
HY Rs.250
2
CI Rs.1352.50
5%

Rs.50
Rs.25

Rs.25

Rs.2.5

Q.20: Find the difference between the compound interest on Rs.2000

at 10% pa after years; when compounded annually and


compounded half yearly?

Rs.2000
10% Y
Sol:
5% HY
CI Rs.310

Rs.200
Rs.100

Rs.10

Rs.2000
5% HY1

Rs.100

5% HY2

Rs.100

Rs.5

5% HY3

Rs.100

Rs.5

Rs.5

Rs.0.25

CI Rs.315.25

Required Difference = 315.25 310 = Rs. 5.25

Q.21: Find the compound interest on Rs.2000 at 20% pa after 9


months; the interest being compounded quarterly?
Rs.2000
5% Q1

Rs.100

5% Q2

Rs.100

Rs.5

5% Q3

Rs.100

Rs.5

Rs.5

Rs.0.25

CI Rs.315.25
Page 15 of 18

Q.22: A certain sum of money grows to 40759 after 2 years at a


certain rate of interest; compounded annually; while grows to
Rs.44834.90 after 2 years at the same rate; compounded annually.
Find the rate of interest and principle.

Short Trick:
r
44834.90 40759
100
r
40759
4075.90
100
r 10%
40759

Sol:

Q.23: A certain sum of money grows to 7290 after 6 years at a


certain rate of interest; compounded annually; while grows to
Rs.531441 after 12 years at the same rate; compounded annually.
Find the rate of interest and principle.

Short Trick:
Sol:

A62years
A12 years

Rs.182250

Rs.531441

Rs.

Q.24: A certain sum of money grows to 3 times of itself at a certain


rate of interest; compounded half yearly; after 2 years. In how many
years would the same sum of money grows to 27 times of itself.

Short Trick:
Sol:

27
Page 16 of 18

Q.25: After how many years; compounded yearly; would Rs.1875


grows to Rs.2028 at 4% pa?

Short Trick:

CI Rs.2028 Rs.1875 Rs.153


P=1875

Sol:

Y Rs.75
2 years
Y Rs.75

Rs.3

Hence after 2 years.

Q.26: After how many years; compounded half yearly; would


Rs.800 grows to Rs.926.10 at 10% pa?

Short Trick:
Sol:

P Rs.800

1
Rs.40
2 Y

1
3 half years Y
Rs.40
2
1
Rs.40
2 Y

CI 126.10 926.10 800


1
Hence aftre r 1 years
2

Rs.2
Rs.2

Rs.2

Rs.0.1

Q.27: At what rate percent per annum; compounded annually; will


Rs.80000 amount to Rs.88200 in 2 years?

Page 17 of 18

Short Trick:

Sol:

CI Rs.88200 Rs.80000 Rs.8200


By Hit and Trial :
I
Rs.4000
II
Rs.4000
Rs.200
r
Now
4000
200
100
100
r 200
5 p.c. p.a.
4000

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Page 18 of 18

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